C-96/77

1. Commission Regulation (EEC) No provided, to the future effects of 101/77 is valid. situations which arose under the previous law. 2. A law amending a legislative provision applies, save as otherwise

In Case 96/77

REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal d'Instance, Valenciennes, for a preliminary ruling in the action pending before that court between

S.A. ANCIENNE MAISON MARCEL BAUCHE

S.A.R.L. FRANÇOIS DELQUIGNIES plaintiffs, E. D. AND F. MAN LIMITED intervener,

1 — Language of the Case: French.

composed of: H. Kutscher, President, M. Sørensen and G. Bosco, Presidents of Chambers, A. M. Donner, P. Pescatore, Lord Mackenzie Stuart and A. Touffait, Judges.

Advocate-General: F. Capotorti Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

The facts of the case, the course of the (Official Journal L 359 of 31 December procedure and the written observations 1974, p. 1). submitted under Article 20 of the Protocol on the Statute of the Court of Article 2 (2) of that regulation indicates Justice of the EEC may be summarized that the sugar marketing year extends as follows: from 1 July of a particular year to 30 June of the following year. Title III of the regulation lays down the I — Facts and procedure following quota arrangements for sugar producers for the 1975/76 to the 1979/­ The law applicable to the sugar trade in 80 sugar marketing years inclusive: 1976 was as follows: The basic regu­ lation applicable to the sugar trade 1. As provided for in Article 24 of Regu­ within the Community was Regulation lation No 3330/74 each undertaking (EEC) No 3330/74 of the Council of is allotted a so-called 'basic quota'. 19 December 1974 on the common The sugar produced within this organization of the market in sugar quota is usually called 'Sugar A'.

2. Pursuant to Article 25 of the regu English Special Edition 1970 (III), p. lation each sugar manufacturer may 957.) be allotted a maximum quota equal As far as concerns exports these to its basic quota multiplied by a provisions did not afford a producer the coefficient to be fixed for the sugar opportunity of replacing sugar C marketing year in question. The produced by him by other sugar which sugar produced within this additional he had not produced. quota is usually called 'Sugar B'. Nevertheless Regulation (EEC) No

The following the end of the marketing regulation simply provides in such case year during which sugar C was for a standard payment in order to produced. offset any benefit derived from such sub stitution. That recital led to the addition The export of sugar C is itself also by Article 1 of Regulation (EEC) No made conditional by Article 12 of Regu 458/73 of a paragraph (3) to Article 2 lation No 3330/74 upon the submission of Regulation (EEC) No 2645/70. of an export licence which is valid According to these provisions sugar C throughout the Community and is could therefore be replaced pursuant to issued to any person who has produced express legal provisions to that effect sugar C irrespective of the place of his and the obligation to expon sugar C establishment in the Community. could be fulfilled by exporting other Detailed rules applicable to these sugar produced in the Community. licences have been laid down by the The mandatary expon of sugar C

calculated. had been adopted in Regulation (EEC) No 2645/70 of the Commission of In this connexion it must be noted that 24 December 1970 (Official Journal, after the amount of sugar C produced

before February 1977. of 6 January 1977 August Töpfer & Co., a company incorporated under The Commission, with the object of German law, assigned to E. D. and dealing with the benefits, in its view F. Man Ltd., (hereinafter referred to as excessive, which certain traders on the 'Man') licences for the expon to non- sugar market reaped from the sub­ Member countries of 800 tonnes of stitution operation when sugar C was white sugar in excess of the maximum exported, decided to intervene during quota (sugar C). the 1976/77 sugar marketing year. According to the Commission these Taking advantage of the opportunity benefits were due to the currency provided by Regulation (EEC) No margins which had developed between 458/73 of choosing between the export Member States whose currencies of sugar C — without any refund (cf. appreciated and those whose currencies Article 26 (2) of the basic 'sugar' regu­ depreciated. It therefore adopted lation, No 3330/74), — and the export Commission Regulation (EEC) No of corresponding amounts of sugar 101/77 of 19 January 1977 (Official from quotas A and B — with a refund — Journal L 17 of 20 January 197, p. 11) Man elected to count the sugar covered which contains the followings pro­ by its licences against sugar C of French visions: origin and assigned them to S.A. 'Article 1 Ancienne Maison Bauche (hereinafter referred to as 'Bauche') which had the Footnote (1) to Part 7 of Annex I to status of an exporter under the French Regulation (EEC) No 572/76 is customs rules in force since it was amended to read as follows: resident in metropolitan territory. The "(1) No monetary compensatory customs agent responsible for the amount shall be applied to sugar exporting arrangements was the exported to non-Member countries Delquignies company (hereinafter pursuant to Article 26 of Regu­ referred to as 'Delquignies'). lation (EEC) No 3330/74. It shall Bauche was therefore entitled to export be levied, however, where the to non-Member countries, without any customs export formalities are refund but also without any monetary completed in a Member Sute compensatory amount, (pursuant to other than that in which the expon licence was issued." Commission Regulation (EEC) No 572/76 - cf. Footnote (1) (a) to Part 2 Article 2 of Annex I) the amount of sugar C covered by the export licences issued This regulation shall enter into force on on 14 February 1977 by the German the day of its publication in the Official intervention agency and the Journal of the European Communities. corresponding export declarations. However, it shall not apply to exports These documents expressly sute effected on the basis of licences issued (translated from the German) The

product concerned is white sugar the Court of Justice of the European produced by the factory in excess of the Communities has given a preliminary maximum quota (production of the ruling on the following questions: 1976/1977 sugar marketing year) for '1. Does not Regulation No 101/77 export in accordance with Article 26 (1) constitute a basic regulation of Regulation (EEC) No 3330/74 amending the general Regulation without either refund or levy (in No 3330/74 on the common organi­ accordance with Article 3 of Regulation zation of the market in sugar in so (EEC) No 2990/76)'. far as it introduces the payment of a The advantage of such an operation monetary compensatory amount in appears to lie in the fact that if, for respect of a product expressly example, sugar C is sold on the German excluded from intervention market as part of a substitution measures? operation for the export of sugar A or B 2. Was the Commission entitled to from France, it attracts the benefit of adopt that measure without the the high intervention price fixed on the German market; this benefit exceeds the express authorization of the Council? relative loss on the export without any refund of French sugar C from France. 3. If the first two questions are However, at this stage Commission answered in the negative, was the Regulation (EEC) No 101/77 of 19 Commission empowered to adopt January 1977 came into force. It Regulation No 101/77 describing a amends Commission Regulation (EEC) transaction expressly authorized by No 572/76 by providing that a Regulation No 458/73 as "a deflection of trade" from which monetary compensatory amount shall be levied on the export of sugar C to non- the trader "benefits ... unfairly", Member countries 'where the customs without repealing the said Regu­ export formalities are completed in a lation No 458/73, which provides Member State other than that in which for a standard payment of two units the export licence was issued'. In June of account per 100 kg of sugar to 1977 the French customs, acting as offset any benefit derived from the substitution authorized? the Commission's authorized agent, levied, pursuant to that regulation, 4. Was the Commission empowered to monetary compensatory amounts on the introduce monetary compensatory 800 tonnes of sugar exported. The amounts on exports to non-Member whole of these amounts was charged to countries of products expressly Delquignies's customs clearance credit. excluded from the intervention

6. Does the adoption in the course of a graph (2) of the same article in trade sugar marketing year of new rules with other Member States and non- having immediate application to Member States. The products referred transactions in progress make such to in subparagraph (2) are those rules retroactive, contrary to the covered by intervention arrangements. principle of legal certainty? However, under Article 26 of the basic 7. In these circumstances, is Regulation regulation No 3330/74, intervention No 101/77 null and void? measures do not apply to sugar C. Until the Commission adopted Regulation No

to Article 20 of the adoption by the Commission of appro Protocol on the Statute of priate measure pursuant to Article 22 of the Court of Justice of the Regulation No 3330/74 was the risk of EEC serious disturbances in trade which might jeopardize the objectives of Bauche and Delquignies, the plaintiffs in Article 39 of the Treaty, provided the main action, and Man, the however that the detailed rules for the intervener in that action, submit in application of those measures were laid answer to the first two questions down beforehand by the Council, which submitted by the national court that the was not in fact done. Commission did not have the powers to adopt Regulation No 101/77.

BAUCHE v ADMINISTRATION FRANÇAISE DES DOUANES

payment of two u. a. per 100 kg of sugar, as a deflection of trade and an Import-Export GmbH v Hauptzollamt unfair benefit. The Commission has Berlin-Packhof [1973] ECR 1091) show that compensatory amounts can be thereby failed to fulfil its duty to applied only to agricultural products provide the necessary information by covered by intervention prices and then giving a statement of the reasons upon only if currency measures cause distur which the regulation was based. bances in trade in those products (threat It was also in breach of the principle of to the maintenance of single prices). legal certainty which must allow traders Regulation No 101/77 deflects com to complete transactions which have pensatory amounts from their proper been expressly authorized without purpose and does not use them for the finding that they are subsequently purpose of maintaining a single price treated as being unlawful. and keeping in being the organization The plaintiffs and the intervener submit of the intervention system but for that the fourth and fifth questions penalizing a transaction which is should be answered in the negative. perfectly lawful, namely the export of Their argument is that the levying of sugar from a country other than the one

established. In order to comply with the principle In fact as regards the calculation of that legitimate expectation must be safe compensatory amounts in the case of guaded whenever a regulation is those Member States whose currencies modified, transitional measures should have been withdrawn from the 'snake' be adopted for the protections of traders who have undertaken the wording of Article 2 (1)(b) of Regu lation No 974/71 as amended by Regu obligations under contracts which are lation (EEC) No 1112/73 of the irrevocable but have not yet been Council makes it clear that the price performed when the new regulation is taken into consideration is the implemented. intervention price of a product covered Producers and traders have based their by intervention measures. However, price calculations for sugar C and

disposed of it in reliance on Community the problem of the temporal application rules in force at the beginning of the of Regulation No 101/77 with special sugar marketing year. Regulation No reference to transactions carried out 101/77 which entered into force during pursuant to obligations undertaken the marketing year frustrates traders' before it entered into force. legitimate expectation that those rules The Commission then produces a state would remain in force. ment of the situation referred to by In any event and in compliance with the Regulation No 101/77 — namely the principle of the protection of legitimate export of sugar C to non-Member expectation the Commission should countries from a Member State other have introduced transitional measures than the one which issued the expon for the implementation of Regulation licence — in order to explain the No 101/77. objective which the measure seeks to The second paragraph of Article 2 of attain and accordingly to justify its sub the said regulation that it is not to apply stantive legality.

the representative conversion rate used lation No 101/77 to traders who were in the common agricultural policy) under -a firm and definite obligation which had developed between Member before the date of entry into force of States whose currencies had been the regulation to export sugar C subject revalued and those whose currencies to conditions agreed beforehand as to had been devalued. According to the the right of substitution and the Commission the effect of these margins exemption from compensatory amounts was that differences were created in on the sugar being exported. Community prices so that the subs For the abovementioned reasons the titution of sugar C in a country where plaintiffs and the intervener in the main the price was high (The Federal action ask the Court for a declaration Republic of Germany, the Benelux that Regulation No 101/77 is not valid. countries) for sugar produced within the limits of the maximum quota in a The Commission points out when country where prices were lower making its preliminary observations that (France, the United Kingdom) became a the first seven questions raise the very profitable operation for traders. question of the validity of Regulation This was to the prejudice of the No 101/77 under three heads, the Community and diametrically opposed legality of the measure adopted as such, to the objective which the Community (Questions 1, 3, 4 and 5) the legislature sought to attain: for example Commission's power to adopt the the sale of sugar C on the German measure at issue (Question 2) and market by way of substitution for the thirdly the possibility that the contested expon of sugar A or B from France regulation may have retroactive effect benefited from the high intervention

BAUCHE ν ADMINISTRATION FRANÇAISE DES DOUANES

Thus it is clear that there was a close January 1976, paragraph No 10, in link in the situation described between Case 55/75, Balkan-Import-Export sugar C and the intervention system GmbH v Hauptzollamt Berlin-Packhof owing to the substitutions effected. This [1976] ECR 30 and 31). point is fundamental for an appraisal of the practical implications of Regulations The Commission completes its No 101/77. argument by submitting that the adoption of Regulation No 101/77 at The Commission points out that from the same time prevented traders from both the physical and the economic making, by exporting sugar C, profits points of view sugar belonging to cate

With reference to the second question the Commission argues that its power to On this point the Commission calls adopt the regulation in dispute is found attention to the case-law of the Court in Anide 6 of Regulation (EEC) No concerning the application of Regu 974/71 of the Council which provides lation No 974/71 according to which that detailed rules for the application of

the regulation 'which may include other The Commission doubts whether ar derogations from the regulations on rangements between traders such as the common agricultural policy' shall those mentioned by the court making be adopted in accordance with the the reference and which form contrac so-called Management Committee tual relations between individuals, may procedure, that is to say by the be invoked as against the Community as Commission. It also quotes the regards the protection of their judgment of the Court of 8 July 1977 legitimate expectation.

compensatory amounts. seen, consisted mainly in ensuring that With regard to the sixth question the an improper use of the opportunity for Commission points out that Regulation substitution afforded by Community No 101/77 has not been applied to rules did not adversely affect the proper exports of sugar C effected pursuant to functioning of the common organi licences issued before 20 January 1977, zation of the market in sugar and the the date when the said regulation system of compensatory amounts. Even entered into force. Consequently it is if it is assumed therefore that there dificult to understand how the existed a legitimate expectation on the applicants can claim it has retroactive part of individuals, such a situation effect in the proper sense of the cannot take precedence over the expression as far as they are concerned. Community's overriding interest, which Furthermore, even if the transactions has just been invoked and which is carried out on the strength of licences opposed thereto. issued before the entry into force Finally the foreseeable nature of the of Regulation No 101/77 had not measure in dispute, at least as regards been exempted from payment of its objective, together with the prudence compensatory amounts, the Commission takes the view that there could not have which every experienced trader should display make it impossible to allege that been any such retroactive effect as could there has been a breach of the principle adversely affect any genuine acquired of the protection of legitimate

BAUCHE v ADMINISTRATION FRANÇAISE DES DOUANES

Regulation (EEC) No 572/76 fixing III — Oral procedure monetary compensatory amounts inter alia in the sugar sector The plaintiffs in the main action, (Questions 1 to 7). represented by Mr Funck-Brentano of the Paris Bar, and the Commission of — The aforementioned Commission the European Communities, represented by its Agent P. Gilsdorf assisted by Regulation (EEC) No 101/77 could one of its legal advisers, J. Delmoly, lawfully be applied to all export submitted oral observations at the transactions not expressly covered by hearing on 7 December 1977. licences issued before the date of The Advocate General delivered his entry into force of the said regu­ opinion at the hearing on 24 January lation (Question 8). 1978.

Decision

1 By and order of 21 July 1977 received at the Court Registry on 29 July 1977 the Tribunal d'Instance, Valenciennes, referred to the Court under Article 177 of the EEC Treaty certain questions concerning the validity of Commission Regulation (EEC) No 101/77 of 19 January 1977 (Official Journal L 17 of 20 January 1977, p. 11) amending Commission Regulation (EEC) No 572/76 of 15 March 1976 (Official Journal L 68, p. 5) fixing monetary compensatory amounts, with special reference to sugar.

2 It emerges from the order making the reference that the French companies which are plaintiffs in the main action have asked the national court to declare Regulation No 101/77 null and void or at least to declare that it does not apply to them and accordingly order the French customs auth­ orities to repay them the monetary compensatory amounts which they levied pursuant to the said regulation on a consignment of white sugar of French origin on its being exported from France to non-Member countries.

— Pursuant to Article 25 each undertaking may in addition be allotted a maximum quota, called 'quota B', equal to its quota A multiplied by a coefficient, and may also sell on the Community market the sugar produced within the limits of the difference between the basic quota and the maximum quota on payment of a production levy (Article 27).

— The sugar produced over and above the maximum quota, called 'sugar C', may not be disposed of on the internal market and must be exported in the natural state on the world market before 1 January following the end of the sugar marketing year during which it has been produced (Article 26).

7 Article 12 of the regulation provides that exports of sugar C shall be made conditional upon submission of an expon licence, valid throughout the Community, which is to be issued by Member States to any applicant irrespective of the place of his establishment in the Community.

8 Article 5 (3) of Commission Regulation (EEC) No 2990/76 of 9 December 1976 (Official Journal L 341 of 10 December 1976, p. 14) as amended by Commission Regulation (EEC) No 278/77 of 9 February 1977 (Official Journal L 39 of 10 February 1977, p. 17) limits the validity of an export licence to the end of the fifth month following that in which the licence was issued.

BAUCHE v ADMINISTRATION DES DOUANES

9 After the entry into force on 1 January 1971 of Commission Regulation (EEC) No 2645/70 of 28 December 1970 (Official Journal, English Special Edition 1970 (III), p. 957) a producer manufacturing sugar in excess of the maximum quota had no opportunity to replace it with sugar not produced by him, since Article 2 (2) (c) thereof provided that a producer who exports sugar C must submit a statement to the effect that the exported sugar was produced by him.

JUDGMENT OF 15. 2. 1978 — CASE 92/77

16 All the provisions referred to above provided the basis for the calculation of the production of and trade in sugar before the sugar marketing year 1976/77.

17 It emerges from the file that the currency margins during the years sub­ sequent to the entry into force of Regulation No 458/73 between Member States whose currencies appreciated (for instance the Federal Republic of Germany) and those whose currencies depreciated (for instance France) widened to such an extent that in January 1977 for example, although the intervention price for 100 kg of white sugar expressed in units of account remained the same throughout the Community, its value expressed in national currency converted, for the purposes of comparison, into American dollars was, owing to the exchange rates used in the agricultural sector, $49-63 in the Federal Republic of Germany and $37-83 in France.

18 Consequently the opportunities for substitution afforded by Regulation No 458/73 together with the fixed parities maintained by the compensatory amounts offered considerable advantages to manufacturers established in the Federal Republic of Germany, who held sugar in excess of the maximum quota.

19 In fact when such a manufacturer assigned the export licence for such sugar to a manufacturer established in France who exported from France to non- Member countries a corresponding quantity of sugar produced by him within the limits of the maximum quota he was then in a position to sell his sugar as though it were part of his own quota and in this way to take advantage of the Community intervention prices which were higher in real terms in the Federal Republic of Germany or, if the sugar was exponed, to receive the monetary compensatory amount.

'No monetary compensatory amount shall be applied to sugar exported to non-Member countries pursuant to Article 26 of Regulation (EEC) No 3330/74. It shall be levied, however, where the customs export formalities are completed in a Member State other than that in which the export licence was issued.'

25 Article 2 of the regulation provides for its entry into force on 20 January 1977 but states that it is not to apply to exports effected on the basis of licences issued before that date.

26 Since the first, second, fourth and fifth questions submitted by the national court are concerned with various aspects of the Commission's powers to apply monetary compensatory amounts to a product 'expressly excluded' from the intervention arrangements, it is advisable to deal with these questions together.

27 The system of monetary compensatory amounts was introduced by Regu­ lation (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 the detailed rules for its application were laid down sub­ sequently by the Commission and amended inter alia, as far as this case is concerned, by Regulation No 572/76 referred to above.

JUDGMENT OF IS. 2. 1978 — CASE 92/77

28 Article 1 (2) of Regulation No 974/71 provides that paragraph (1) thereof shall apply:

33 Hence the charge introduced by the regulation is in fact imposed upon sugar A or B exported on the basis of an expon licence for sugar C.

34 The plaintiff companies and the intervener in the main action also submit that by levying monetary compensatory amounts on sugar C, Regulation No 101/77 has illegally amended Regulation (EEC) No 3330/74 of the Council on the common organization of the market in sugar, which exempted sugar C from the application of any Community intervention measure and consequently from the application of compensatory amounts.

BAUCHE v ADMINISTRATION DES DOUANES

35 This argument cannot be upheld.

36 In fact the foregoing makes it clear that Regulation No 101/77 leaves intact the common organization of the markets in sugar established by Regulation No 3330/74 and that its sole effect is to make a minor amendment to the detailed rules for the application of the system of monetary compensatory amounts laid down by Regulation No 974/71 for the purpose of dealing with very specific and restricted circumstances.

37 Consequently the answer to the national court must be that consideration of the first, second, fourth and fifth questions has disclosed no factor of such a kind as to affect the validity of Regulation No 101/77.

imposes charges on such transactions as are effected by means of exports from Member States with soft currencies and which yield a profit not contemplated by Regulation No 458/73.

43 Thus the objective which the two regulations seek to attain are not incompatible.

44 In fact the aim of Regulation No 458/73 is to facilitate trade by allowing substitution transactions whereas Regulation No 101/77 is designed to prevent deflections of trade which are caused not by the system of sub­ stitution as such, but by artificial transactions made attractive under the system of compensatory amounts by such substitution.

45 Lastly there is no inconsistency between the introduction by Regulation No 458/73 of the standard payment to offset the benefits derived from sub­ stitution as such and the introduction by Regulation No 101/77 of monetary compensatory amounts for the reduction of benefits, arising purely from currency fluctuations, which did not exist when Regulation No 458/73 was adopted and which, in the form of speculative profits, were only subsequently realized.

46 Hence the statement of the reasons upon which Regulation No 101/77 is based is not defective and the regulation is not in breach of the principle of legal certainty in the sense referred to above.

47 In its sixth question the national court asks whether the adoption during the sugar marketing year of new rules having immediate application to transactions in progress does not make such rules retroactive, contrary to the principle of legal certainty.

53 The national court's last question is whether Regulation No 101/77 could be lawfully applied to 'traders who ... had concluded firm and definite contracts' before 20 January 1977 'by which they bound themselves subject to firm and definite conditions to purchase C quota sugar or to become assignees of C quota licencers'.

54 It in fact raises the question of the application of the principle of the protection of legitimate expectation to the system of monetary compensatory amounts.

55 The Court held in its judgment of 14 May 1975 in Case 74/74, Comptoir National Technique Agricole (CNTA) SA. v Commission of the European Communities [1975] ECR 549, paragraph 39: 'The conditions governing the application and abolition of the system of compensatory amounts in a specific sector do not take into account the individual situations of traders and do not guarantee them a continuous application of the system'.

56 Taking into account the objective of the system of monetary compensatory amounts the same reasoning applies to the introduction of a monetary compensatory amount in circumstances covered by the field of application of the system but which had not previously arisen.

JUDGMENT OF 15. 2. 1978 — CASE 92/77

57 Furthermore, since Regulation No 101/77 aimed at discouraging transactions in progress in the sugar sector which were capable of leading to deflections of trade, such a regulation, justified by the existence of an overriding Community interest, was to be expected by the traders concerned.

in answer to the questions referred to it by the Tribunal d'Instance, Valenciennes, by order dated 21 July 1977 hereby rules:

Consideration of the questions raised by the Tribunal d'Instance, Valenciennes, has disclosed no factor of such a kind as to affect validity of Commission Regulation (EEC) No 101/77 of 19 January 1977.

Kutscher Sarensen Bosco

Donner Pescatore Mackenzie Stuart Touffait

Delivered in open court in Luxembourg on 15 February 1978.

A. Van Houtte H. Kutscher