C-94/77

Although it is true that in the event in the absence of the monetary of difficulty of interpretation the measures referred to in Article 1 of national administration may be led to Regulation No 974/71. adopt detailed rules for the ap­ 4. As regards the application of Article plication of a Community regulation 4 (2) of Regulation No 1013/71 the and at the same time to clarify any question is whether the contract was doubts raised, it can do so only in so executed under the conditions which far as it complies with the provisions would have existed in the absence of of Community law and the national the monetary measures which led to authorities cannot issue binding rules the introduction of the monetary of interpretation. compensatory amounts. Where the 2. Regulations Nos 974/71 and contract provides for payment by the 1013/71, as amended by Regulation opening of an irrevocable docu­ No 2887/71, do not permit Member mentary credit the answer must States to adopt provisions laying depend on the nature of the down specific criteria concerning the arrangements agreed between the applicability or otherwise of com­ importer and the issuing bank and pensatory amounts to contracts concluded before 19 December 1971 these may in turn depend on the in order to 'allow the contract to be provisions of the local law applicable to them. Where the credit is to be executed under the conditions which would have existed had the monetary opened for a sum in foreign currency measures referred to in Article 1 of (as, in this case, dollars), the crucial Regulation (EEC) No 974/71 not date will be that upon which the rate been taken', as provided for under of exchange determining the amount Article 4 (2) of Regulation No of the importer's liability to the 1013/71. issuing bank was applicable. 3. The provisions of Article 4 (2) of 5. For the purpose of determining Regulation No 1013/71 are fully whether the conditions for applying effective in themselves and must and determining monetary compen­ therefore be interpreted as leaving it satory amounts are fulfilled reference to the courts of the Member State must be made in respect of each concerned to decide whether the commercial transaction (importation contract was executed under the or exportation) to the day of the conditions which would have existed importation or exportation.

on the interpretation of certain provisions of Regulation (EEC) No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (Official Journal, English Special Edition 1971 (I) p. 257) and Regulation (EEC) No 1013/71 of the Commission of 17 May 1971 laying down detailed rules of application for Regulation (EEC) No 974/71 (Official Journal, English Special Edition 1966-1972 p. 52),

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,

Advocate General: J.-P. Warner Registrar: A. Van Houtte

gives the following

JUDGMENT

'However, paragraph (1) shall apply The imposition of monetary com­ only to the extent necessary to allow the pensatory amounts on imports made contract to be executed under the into Italy from third countries is not conditions which would have existed justified in view of the devaluation of had the monetary measures referred to the Italian lira in relation to other in Article 1 of Regulation (EEC) No Community currencies. 974/71 not been taken.' In answer to the claim the Ammini­ The Italian legislation adopted in strazione delle Finanze dello Stato application of these Community contended that Article 20 of provisions is to be found in Article 20 of Decree-Law No 661 was a necessary Decree-Law No 661 of 15 November implementing measure for Article 4 (2) 1972 (which became Law No 843 of 18 of Regulation No 1013/71 and thus December 1972) which provided: The perfectly compatible with it. compensatory amounts ... shall not be The Tribunale di Genova took the view payable in respect of goods which are the subject of commercial transactions that a question of the interpretation of concluded prior to 19 December 1971 Community provisions arose and by even if they are cleared for final impor­ order dated 13 June 1977 stayed the tation after 2 January 1972, provided proceedings and referred the following that payment is made in currency other questions to the Court of Justice for a than US dollars or alternatively in US preliminary ruling under Article 177 of dollars covered by exchange guarantee the EEC Treaty: or other clauses having the same effect'. The Italian undertaking Fratelli A — With reference to the provisions of Zerbone, the plaintiff in the main Article 4 (1) and (2) of Regulation action, imported consignments of (EEC) No 1013/71 of the Com­ frozen beef and veal, unboned (bone- mission of 17 May 1971, as in), from third countries under contracts amended by Article 4 of Regulation of purchase concluded before 19 (EEC) No 2887/71 of the December 1971. For these imports, Commission of 30 December 1971 payment of which was agreed and made in US dollars by opening a series of On the assumption that the said irrevocable credits in favour of the paragraph (2) of Article 4 of Regulation exporter-supplier, the plaintiff was (EEC) No 1013/71 is still in force and asked to pay as monetary compensatory that it must be interpreted in the light of amounts the sum of Lit 140 771 735. the fifth recital to the said regulation, Zerbone took the view that this the following questions are submitted: payment was not due and sought a (1) Do Regulations (EEC) Nos 974/71 declaration from the Tribunale di and 1013/71, the second of which Genova that it was not required to pay was in part amended by Regulation the sum. In its claim it makes the (EEC) No 2887/71, permit the following allegations: Member States, and in particular the

Italian State, to promulgate rules (4) Is the reference to allowing 'the having the force of law laying down contract to be executed' in the said specific criteria concerning the Community provision to be taken as applicability or otherwise of com­ meaning and sufficient to refer to pensatory amounts to contracts the fulfilment by the importer of the concluded before 19 December 1971 obligation to pay the price in in order, as provided for under accordance with the conditions Article 4 (2) of Regulation (EEC) stipulated in the contract? No 1013/71, to 'allow the contract (5) In the case of payment made by the to be executed under the conditions opening of an irrevocable credit in which would have existed had the favour of the exporter must the monetary measures referred to in contract be regarded as having been Article 1 of Regulation (EEC) No executed on the date of communi­ 974/71 not been taken'? cation to the payee of the notice of (2) If Question 1 is answered in the opening of the irrevocable credit in his favour or, on the other hand, on affirmative, does Article 20 of Decree Law No 661 of 15 the date when the price is actually paid to the exporter? November 1972, enacted as Law No 843 of 18 December 1972, which B — With reference to Articles 2, 3 and provides that compensatory amounts 4 of Regulation (EEC) No 974/71 shall not be due on goods which are of the Council of 12 May 1971 the subject of commercial trans­ actions concluded before 19 Under the system of monetary com­ December 1971, even though pensatory amounts adopted by Regu­ cleared for final importation after 2 lation (EEC) No 974/71, the impor­ January 1972, provided that tation of the products referred to in payment is made in currency other Article 2 of that regulation could be than US dollars or alternatively in subject to monetary compensation, US dollars covered by exchange provided that fluctuation (beyond the guarantee or other clauses having limits laid down) of the exchange rate the same effect, answer the purpose, of the currency of the importing State in the majority of cases, of pursuing was recognized as a revaluation of that the said objective in Article 4 (2) of currency in relation to the official parity Regulation (EEC) No 1013/71; against United States dollars. and, accordingly, is it or is it not As the result of the monetary policy compatible with the Community decisions adopted on 18 December 1971 provision? and of the adoption of the. 'central (3) If the answer to Question 1 is in the exchange rates' by some Member States, negative, is the rule in Article 4 (2) the currencies of all the Member States of Regulation (EEC) No 1013/71 were revalued in terms of the US dollar; completely effective in itself and is it and since, on the other hand (according therefore to be interpreted as having to the plaintiff), in the first weeks when intended to leave it to the courts of these provisions were applied, the the Member State concerned to Italian currency depreciated in value. decide when the contract was ex­ The following questions accordingly ecuted under the conditions which arise:

Italiane legally entitled to levy the sequent regulations. The national rules compensatory amounts while that would also be unlawful even if it were situation lasted? considered that in adopting the detailed (2) Bearing in mind that the rules referred to in Article 6 of Regu lation No 974/71 the Commission had compensatory amounts may vary from time to time, in accordance made incomplete arrangements and had entrusted the Member States with the with variations in exchange rates, what is the date to be used as a task of completing them. A provision of reference point in the case of a basic regulation of the Council which individual commercial transactions authorizes the Commission to adopt, in determining whether or not the after consulting the Management conditions required by Community Committee, detailed rules directly legislation exist for the application applicable in a Member State cannot be of compensatory amounts (Article 4 interpreted as allowing the Commission of Regulation (EEC) No 974/71), to entrust the Member State in question for the fixing of the amount thereof (even implicitly) to adopt such detailed rules since it is a task which the Council (Article 2) and for any alteration in has entrusted to the Commission and them (Article 3); in particular, must reference be made to the date of which would thus be removed from any importation or exportation of the control by the Council (cf. judgment of goods, or the date on which the 30 October 1975 in Case 23/75 Rey price is paid or to any other moment Soda [1975] ECR 1279).

They differ preparatory inquiry. from supplementary rules which presuppose a legislative lacuna which they are intended to fill by acting within II — Summary of written obser and affecting the substance of the rules. vations submitted to the By defining independently the criteria Court under Article 20 of for application in Italy of the the Protocol on the Statute compensatory amounts to contracts of the Court of Justice of concluded before 19 December 1971 the EEC Article 20 of Decree-Law No 661 expresses an essential legislative content Zerbone maintains that the national which takes the place of that of Article rules are illegal for two reasons. 4 (2) of Regulation No 1013/71 by First, the Italian legislature did not have annulling any direct effect which the power to legislate in the matter. The latter has in the Italian legal system. choice of the criteria for applying or not In the second place Article 20 of applying compensatory amounts in Italy Decree-Law No 661 has a legislative was conferred by Article 6 of Regu content differing from that of Article 4 lation No 974/71 solely to the (2) of Regulation No 1013/71.

ZERBONE v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

taken'. On the other hand as regards postponed in relation to the conclusion the national law such factors would be of the contracts, was due to be quite irrelevant. performed at a different time from that Article 4 (2) of Regulation No 1013/71 of delivery of the goods. In view of the provides that imports effected on the fact that the objective of the basis of contracts concluded before 19 Community provision is to compensate December 1971 can be the subject of for currency fluctuations on prices for compensatory measures only if and to which intervention measures are the extent to which such contracts were provided in the context of the common executed in the same conditions of organization of the agriculture market monetary equilibrium as those which and that they could affect only the existed before the devaluation of the US obligation to pay the price it is

In making such provision have declared them unlawful. On the the importer irrevocably performs his other hand the application of Article 20 part of the contract and it is to this time of Decree-Law No 661 would lead to that reference should be made to decisions inconsistent with and contrary establish whether the trader has profited to the Community provisions because from the monetary crisis of 18 even if the price of the transaction had December 1971. In the same way the been settled in dollars without an time when the credit is used is quite exchange guarantee the purchaser irrelevant for the system of

The Italian Government observes that these circumstances it was the duty of the Italian Government to ensure that Article 4 (2) constitutes a derogation the devaluation of the dollar in relation from the prohibition on applying to the Italian lira did not alter the per­ compensatory amounts to imports made on the basis of contracts concluded formance of contracts the payment for which had been provided for in dollars before a certain date (for Italy 19 or the imports relating thereto. It might December 1971). The reason for this is have happened that in spite of the fact maintenance of the principle of the that the contracts had been made prior protection of the legitimate expectations of traders and also (since it is a matter to 19 December 1971 the importer might profit as regards payment from of compensatory amounts on imports) the devaluation in question. In this case by the need to prevent the price in not only would the importer have had national currency of the imported an unjustified profit but there would products and thus the price of the have been adverse repercussions on importing countries from differing from Community prices. For these reasons the Community prices. the national rule referred to in Article Article 4 (2) does not contain (and 20 of the Decree-Law in question was could not contain) a precise and limited to taking into account imports complete rule making it unnecessary for made on the basis of contracts (or at least not allowing) any sub­ providing for payment in dollars. To sequent legislative activity on the pan of this end the criteria adopted are of two the Member States for giving actual kinds, namely: effect to it. Its content is complete and is in the nature of a rule in the case (a) the contract relating to payment in dollars should contain an 'exchange where it provides for derogation; on the guarantee' clause; other hand it expresses only an objective to be attained when it accepts this dero­ (b) or other clauses 'having similar gation '... to the extent necessary...'. effects'. The criteria specified to determine in the particular case if and when the It is quite a common practice in inter­ aforementioned objective is fulfilled can national commercial transactions to thus be provided for and determined by provide for the criterion mentioned the Member States on condition under (a). If the currency specified in obviously that the criteria are consistent the contract is devalued in relation to

in question provided for would have As to the question contained in B (2) involved an appreciable reduction in the the answer is contained by implication potential scope of the principle in the provisions of Article 1 of Regu­ established in Article 4 (2) of Regu­ lation No 974/71. The compensatory lation No 1013/71. The national rule amounts are chargeable 'on imports' referred to in Article 20 of Decree-Law and granted 'on exports'. The relevant No 661 thus provided a second and dates are those of import and export. more general and flexible criterion by means of which the objectives in As regards the questions contained question would remain guaranteed. under A (1) and (2) the Commission observes that the objective of the It would cover all cases where it could Community legislature in Regulation be shown by means of strict No 1013/71 was to avoid unexpected documentary evidence subject to damage to a party to a contract who, assessment by the court that the price of while showing all the necessary and the transaction to the importer in Italian usual diligence of a trader could not lire had remained unchanged in relation foresee the introduction of compen­ to that which was provided before 19 December 1971. The national rule is satory amounts; there was no question however of granting a benefit or thus not incompatible with the premium to the Italian importer for Community rule but constitutes a whom the introduction of monetary necessary rule of implementation. compensatory amounts did not involve The reference to allowing 'the contract any adverse consequences. A case of to be executed...' contained in the the kind where the payment of aforementioned Article 4 be (2) can compensatory amounts constitutes an understood only as the performance of additional charge may arise in the obligation by the importer-purchaser numerous circumstances, for example to pay the price fixed in dollars. And when the payment has been made in since the performance of this obligation Italian lire, when the payment for the assumes that the dollars necessary for goods has been made before 19 payment of the price have already been December 1971 or yet again when the acquired where this is proved by means necessary foreign currency for the of documents the monetary measures of payment (providing that it relates to 19 December 1971 cannot affect the commercial transactions concluded performance of the contract. before 19 December 1971) has been The same conclusion applies to the acquired in forward dealings before that question contained under A (5) which date. Where the contract concluded nevertheless does not relate to the inter­ between an Italian importer and an pretation of Community law. Where exporter in another State at the date payment is made by the opening of an and subject to the conditions provided irrevocable credit it is for the national for in Article 4 (1) of Regulation No court to determine the date on which 1013/71 provides for payment for the the bank's customer provided the goods in dollars, the Italian importer

may find himself in one of the following formance of the contract has taken situations: place under conditions which would have existed in the absence of the — Either he has already bought the dollars in cash or for the account at monetary compensatory amounts. A rule inserted to ensure fairness, such as the exchange rate applicable before the devaluation of the US currency that of Article 4 (2) of Regulation No and in this case he will not be able 1013/71, requires, each time it is relied on, consideration of the transaction in to profit from the devaluation. He will thus have paid the question first by the administrative corresponding value in Italian lire authority and, where contested, by the courts so as to avoid the conferment of which he had originally expected to pay and the imposition of an advantage where no damage has compensatory amounts would been suffered or conversely the refusal involve him in a new and of the benefit to a person who satisfies unexpected burden with adverse the required conditions. effects so far as the contract is As to the fourth and fifth questions the concerned on the respective reference to allowing 'the contract to be obligations of the parties to the executed' must be understood as contract and, as far as he is meaning, when it is a question of the concerned, on his financial obligation on the importer of goods obligation. coming from other Member States or, — Alternatively he may not yet have as in the present case, from third acquired the dollars and he pays for countries, the performance of the the imported goods with dollars obligation on the purchaser. It is devalued by the percentage referred necessary therefore to establish whether to above. In this case the imposition the contract has been performed on the of compensatory amounts does not conditions originally provided for. In harm the performance of the view of the fact that it is only by contract. specific inquiry that it is possible to ascertain this, it seems to the It follows from the above that the words Commission that the conditions pro­ used in the fifth recital and in Article 4 vided for the payment for the goods are (2) of Regulation No 1013/71 are not decisive; in the same way the necessarily incomplete and consequently opening of an irrevocable credit does find concrete application in a series of not necessarily establish the fact that cases which the national provisions and the time when the foreign currency (providing of course that they respect has been acquired by the bank and the objective of the Community rules) debited to its customer-purchaser unless may provide for expressly. The there has been an exchange guarantee Community rules are directly applicable or other similar clause. It is the

— the US dollar was devalued by the Community rules which in 7.89%; respect of certain contracts give — the Italian lira was devalued by 1%. exemption from the payment of monetary compensatory amounts on The Italian lira was therefore revalued importation. in relation to the dollar. In view of its objective Article 4 (2) As to Question B (2) the Commission of Regulation No 1013/71 must be considers first of all that in fixing the interpreted as meaning that contracts monetary compensatory amounts the relating to imports of goods payment decisive factor is the day of import or for which has been made in devalued export. The object of the system is to US dollars following the Washington re-establish at the frontier the common agreements of 18 December 1971 do price which constituted the basis on not have the benefit of the exemption which the common agricultural policy in question. was founded before being disturbed by The decisive factor is the conditions the currency crises which have suc­ and in particular the rate of ex­ ceeded one another since 1969. If the change at which payment was made; burden or advantage represented by the on the other hand the opening of an compensatory amounts for the person irrevocable credit is not in itself paying or receiving them were displaced relevant. in time there would be added to all the inconveniences already existing and 2. The imposition of monetary com­ resulting from the absence of fixed pensatory amounts could be auth­ parities a new inconvenience arising orized only by the Commission, from the fact that during the period which fixed the amounts. In deter­ elapsing between the date of import or mining the amounts applicable it is export and that of payment the trader necessary to refer to the day on would unfairly have to face an which the import was effected, that uncovered balance with loss of value or is to say, the day on which the would profit quite as unfairly from a declaration of importation of the delay in payment with a consequent goods was accepted by the customs advantage over his competitors. The day authorities. of importation should be regarded as the day on which the import declaration The plaintiff in the main action, of the goods is accepted by the customs represented by Mr Rossetto of the authorities (cf. judgments given in Cases Naples Bar, the Government of the 35/71 [1971] ECR 1083, 113/75 [1976] Italian Republic, represented by Mr ECR 983 and 74/74 [1975] ECR 547). Braguglia, Vice Awocato dello Stato, The Commission considers that the and the Commission of the European questions put by the Tribunale di Communities, represented by its Legal Genova should be answered as follows: Adviser, Mr Maestripieri, acting as Agent, made oral observations at the 1. Article 4 (2) of Regulation No hearing on 1 December 1977. 1013/71, repealed by Regulation No 2342/72 [sic], allowed Member The Advocate General delivered his States to adopt supplementary pro­ opinion at the hearing on 13 December visions for the practical execution of 1977.

5 The Zerbone undertaking considered that this demand for payment was not justified on the ground that it was based on the Italian Decree-Law No 661 of 15 November 1972, which adopted the Community rules in the matter but which incorporated new provisions, and that there should be no imposition of monetary compensatory amounts on imports made into Italy from third countries in view of the devaluation of the Italian lira in relation to other Community currencies.

ZERBONE v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

6 The Italian Finance Administration, the defendant in the main action, maintains that the national law is a necessary implementation measure for applying Article 4 (2) of Regulation No 1013/71 and is accordingly com­ patible with it.

7 The questions raised are as follows:

A — With reference to the provisions of Article 4 (1) and (2) of Regulation (EEC) No 1013/71 of the Commission of 17 May 1971, as amended by Article 4 of Regulation (EEC) No 2887/71 of the Commission of 30 December 1971.

On the assumption that the said paragraph (2) of Article 4 of Regulation (EEC) No 1013/71 is still in force and that it must be interpreted in the light of the fifth recital to the said regulation, the following questions are submitted:

(4) Is the reference to allowing 'the contract to be executed' in the said Community provision to be taken as meaning and sufficient to refer to the fulfilment by the importer of the obligation to pay the price in accordance with the conditions stipulated in the contract?

(5) In the case of payment made by the opening of an irrevocable credit in favour of the exporter must the contract be regarded as having been executed on the date of communication to the payee of the notice of opening of the irrevocable credit in his favour or, on the other hand, on the date when the price is actually paid to the exporter?

B — With reference to Articles 2, 3 and 4 of Regulation (EEC) No 974/71 of the Council of 12 May 1971

Under the system of monetary compensatory amounts adopted by Regu­ lation (EEC) No 974/71, the importation of the products referred to in Article 2 of that regulation could be subject to monetary compensation, provided that fluctuation (beyond the limits laid down) of the exchange rate of the currency of the importing State was recognized as a revaluation of that currency in relation to the official parity against United States dollars.

As the result of the monetary policy decisions adopted on 18 December 1971 and of the adoption of the 'central exchange rates' by some Member States, the currencies of all the Member States were revalued in terms of the US dollar; and since, on the other hand (according to the plaintiff), in the first weeks when these provisions were applied, the Italian currency depreciated in value. The following questions accordingly arise:

10 Following the decisions taken at "Washington on 18 December 1971 Italy informed the International Monetary Fund of a new exchange rate (called the 'central rate') for its currency, namely the rate of Lit 581.50 per dollar with a margin of fluctuation of 2.25% on either side.

11 Since Italy had accepted a rate of exchange for its currency higher than the fluctuation limit authorized by the international rules, that is to say the Bretton Woods Agreement of 27 December 1945, it follows that the condition for the application of the system of monetary compensatory amounts in Italy existed in spite of the fact that in relation to certain other currencies the Italian lira was devalued.

12 Accordingly the Commission was empowered to adopt in Regulation No 2887/71 the detailed rules for applying Regulation No 974/71 to Italy and to determine the monetary compensatory amounts applicable to Italy in Regulation No 17/72 of 31 December 1971 (Journal Officiel L 5, p. 1) and the subsequent rules.

13 Question B (1) should be answered to that effect.

14 The second question under B asks what is the date to be used as a reference point in the case of individual commercial transactions (import or export) in determining whether or not the conditions exist for the application of compensatory amounts and for fixing the amount thereof.

JUDGMENT OF 31. 1. 1978 — CASE 94/77

'(1) The Member States referred to in Article 1 of Regulation (EEC) No 974/71 shall not apply the compensatory amounts referred to in that article to imports effected under contracts:

(a) concluded before:

19 December 1971, for France and Italy; and

ZERBONE v AMMINISTRAZIONE DELLE FINANZE DELLO STATO

(b) registered before:

28 December 1971, for France and Italy,

25 The scrupulous observation of this duty is an indispensable requisite for the simultaneous and uniform application of Community regulations throughout the whole of the Community.

JUDGMENT OF 31. 1. 1978 — CASE 94/77

26 Accordingly Member States must not adopt or allow national institutions with a legislative power to adopt a measure by which the Community nature of a legal rule and the consequences which arise from it are concealed from the persons concerned.

27 Although it is true that in the event of difficulty of interpretation the national administration may be led to adopt detailed rules for the application of a Community regulation and at the same time to clarify any doubts raised, it can do so only in so far as it complies with the provisions of Community law and the national authorities cannot issue binding rules of interpretation.

28 Article 4 (2) of Regulation No 1013/71, understood in the light of the fifth recital in the preamble to the regulation, may be interpreted and applied by a court without it being necessary to adopt national legislative provisions for its interpretation.

29 Accordingly the provisions of that article have a direct effect in every Member State and the courts of each Member State have the task, subject to the possibility of a reference under Article 177 of the EEC Treaty, of deciding as to their application in all cases of dispute arising in that State.

Costs

35 The costs incurred by the Government of the Italian Republic and by the Commission of the European Communities which have submitted obser­ vations to the Court are not recoverable and 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, the decision on costs is a matter for that court.

On those grounds,

THE COURT,

in answer to the questions submitted to it by the Tribunale di Genova by order of 26 July 1977, hereby rules:

(1) Regulations Nos 974/71 and 1013/71, as amended by Regulation No 2887/71, do not permit Member States to adopt provisions laying down specific criteria concerning the applicability or otherwise of compensatory amounts to contracts concluded before 19 December 1971 in order to 'allow the contract to be executed under the conditions which would have existed had the monetary measures referred to in Article 1 of Regulation (EEC) No 974/71 not been taken', as provided for under Article 4 (2) of Regulation No 1013/71.

Kutscher Sørensen Bosco

Donner Pescatore Mackenzie Stuart O'Keeffe

Delivered in open court in Luxembourg on 31 January 1978.

A. Van Houtte H. Kutscher

Registrar President

OPINION OF MR ADVOCATE GENERAL WARNER DELIVERED ON 13 DECEMBER 1977