C-112/77

JUDGMENT OF 3. 5. 1978 — CASE 112/77

In Case 112/77

August Topfer & Co. GmbH, Hamburg, represented by Kurt Mittelstein, Hans Paetow and Wolfgang Bichmann, Rechtsanwälte, Hamburg, with an address for service in Luxembourg at the Chambers of Ernest Arendt, 34b, Rue Philippe II,

applicant, v

Commission of the European Communities, represented by its Legal Adviser, Peter Gilsdorf, assisted by Jacques Delmoly, a member of its Legal Department, with an address for service in Luxembourg at the office of Mario Cervino, a member of its Legal Department, Jean Monnet Building, Kirchberg,

defendant,

JUDGMENT

Facts and Issues

JUDGMENT OF 3. 5. 1978 — CASE 112/77

On that occasion the However, any person who has obtained Council added the following provision advance fixing of such amounts for a as the second subparagraph of Article 4 specific transaction may, by written (2): application which must reach the competent authority within thirty days "Before the date of application of the of the entry into force of the measures new rate it may be decided to offset this disadvantage by an appropriate fixing the altered amounts, obtain can cellation of the advance fixing and of measure.

Article 1 Journal, English Special Edition, 1959- (1) of that regulation is worded as 1962, p. 274) which justifies measures follows: providing exceptions from the principle "With respect to products for which as that par values should be used to monetary compensatory amount is convert one currency into another, on fixed, cancellation of the advance fixing 27 February 1975 the Council adopted and of the relevant document or certifi Regulation No 475/75 fixing the re cate, as provided for in the last subpara presentative rates to be applied in agri graph of Article 4 (1) of Regulation

The said following proviso: provisions apply only to advance fixing

"(1) The compensation referred to in the second subparagraph of Article (b) Facts [4] (2) of Regulation (EEC) No The main object of the applicant under­ 878/77 shall be granted for white taking, a company with limited liability, sugar in respect of which the is home and foreign trading in large customs export formalities are quantities of sugar. It has a large completed on or after 1 July 1977 number of export licences issued before in pursuance of partial invitations 26 April 1977 in respect of which the to tender under Regulation (EEC) customs export formalities were effected No 2101/75 and for which an after 15 July 1977. export licence was issued before 26 April 1977. In the case of the period subsequent to 15 July 1977 it has in its possession This compensation shall be fixed decisions of the German customs auth­ for the Member States concerned orities relating to 11 761 590 kilograms as shown in Annex I hereto. of sugar exported on the basis of Regu­ (2) The right of cancellation provided lation No 1583/77. for in the last subparagraph of Article 4 (1) of Regulation (EEC) (c) Procedure No 1134/68 shall not apply in respect of the export licences The applicant by an application lodged referred to in paragraph (1)". at the Court on 15 September 1977 brought the present action for the The compensation was fixed in Annex I annulment of Commission Regulation to the regulation at DM 2.33 for the (EEC) No 1583/77 of 14 July 1977 Federal Republic of Germany. and, alternatively, for compensation for the damage which it suffered as a result The Commission's calculation was of the application of Regulation No based on a 1977/1978 monetary 1583/77. compensatory amount of DM 8.40 derived from the intervention price for The Court, after hearing the report of the marketing year. The Commission by the Judge-Rapporteur and the views of Regulation (EEC) No 1474/77 of 30 the Advocate General, decided to open June 1977 (Official Journal 1977, No L the oral procedure without any 163, p. 1) fixed the compensatory preparatory inquiry.

The applicant claims that the Court The applicant considers that Regulation should: No 1583/77 is illegal because it is in breach of the principles which must be — Annul Commission Regulation observed in this case and which are (EEC) No 1583/77 of 14 July 1977; contained in Regulations (EEC) Nos — Alternatively, declare that the 653/68 and 1134/68 of the Council, the Commission of the European latter of which lays down rules for the Communities must, in accordance implementation of the said Regulation with the second paragraph of Article No 653/68. According to those 215 of the EEC Treaty, compensate principles the interests of the parties it for the damage which it has concerned who have obtained advance suffered as a result of the fixing may not be adversely affected. application of Regulation No Such principles are confirmed by the 1583/77. second subparagraph of Article 4 (2) of Regulation No 878/77 which provides The defendant contends that the Court that "Before the date of application of should: the new rate it may be decided to offset this disadvantage by an appropriate — Dismiss the application in its entirety measure". as unfounded; On 29 April 1977 the Commission, — Order the applicant to bear the pursuant to that provision, laid down costs. the special rules for the sugar sector (Article 2 of Regulation No 937/77) and fixed the compensation at DM 2.33. III — Submissions and argu­ ments of the parties Since the date of application of the new exchange rate was 1 July 1977 it is clear from the second subparagraph of Article Admissibilty 4 (2) of Regulation No 878/77 that The applicant submits that the contested there was no legal foundation upon which the Commission could fix a new regulation, together with Regulation No 937/77 and Regulation No 878/77, compensatory amount on 14 July 1977 refers to a specific number of situations the date on which it adopted Regulation No 1583/77. which have actually materialized. When the Commission adopted the regulation Furthermore the new fixing is illegal at issue it ought to have known that it because, owing to Regulation No affected the interests of the holders of 937/77, holders of licences in the sugar export licences. Thus the applicant is sector are more harshly treated than distinguished individually just as in the holders of licences in the other agri­ case of a person addressed. cultural sectors. The latter were in fact able to choose either to continue the The defendant does not raise any objection as to the admissibility of the transaction in question on the basis of principal claim. the licence which they had obtained or to exercise their right of cancellation. As far as concerns the admissibility of Since this option has been withdrawn the alternative claim it states that the from licensees in the sugar sector, applicant's arguments have not been the latter should have received stated with sufficient clarity (Article 38 compensation for the consequential of the Rules of Procedure). damage which was suffered, as

happened in 1976. The same measures June 1977 as provided for in the second should have been adopted in 1977. subparagraph of Article 4 (2) of Regu­ lation No 878/77. The defendant states first of all that the rules governing compensatory amounts The defendant in its rejoinder points out are based on the concept of a disad­ that there is a fundamental difference of vantage under which the traders opinion between it and the applicant as concerned may be placed by the to the proper meaning of offsetting the application to them of the new represen­ disadvantage within the meaning of tative conversion rate in accordance Article 4 (2) of Regulation No 878/77. with Article 2 (2) of Regulation No The Commission takes the view that 878/77 (pages 3 to 6 of the defence). offsetting the disadvantage must be As far as the power to adopt the regu­ limited to preventing the holder of a lation at issue is concerned the licence with advance fixing of the defendant submits that is has complied amount of the refund from being clearly completely with the provisions of Article placed at a disadvantage as far as 4 (2) of Regulation No 878/77. By concerns the amounts to be granted enacting the measure contained in after 1 July 1977. On the other hand the Article 2 of Regulation No 937/77 the applicant is of the opinion that decision was made before 1 July 1977 to offsetting the disadvantage must include replace the right of cancellation by the increase of the compensatory compensation for the disadvantages. On amount which might have resulted from the other hand Regulation No 878/77 the increase in the price of sugar, that is certainly does not provide that the to say in short must compensate it for amount of the compensation must be any loss of profits. fixed before the above-mentioned date. The Commission points out with The applicant submits that, when the reference to the fact that it acted Commission calculated the disadvantage differently the previous year that it suffered by the exporter which it was cannot be denied the legislative power necessary to offset, it merely compared to define offsetting the disadvantage, if the absolute compensatory amounts as if need be, in a restrictive sense. the disadvantage consisted of the difference between those amounts. It is As far as Article 4 (2) of Regulation No 878/77 is concerned the Commission not taking account of the fact that in maintains that the objective of that any case pan of the new compensatory amount can only be used to offset the provision has been attained by the price increase due to the change in the adoption of Regulation No 937/77. It rate of exchange of the German mark takes the view that the parties concerned could henceforth know that and incorrectly appropriates that part of the 1977/1978 monetary compensatory the possibility of cancelling the certifi­ cates was ruled out and had been amount to offsetting the disadvantage caused by the discontinuance of the replaced by compensation for the disad­ right of cancellation. vantage suffered.

from the procedure which it had already been issued constitute a specific adopted until then. The amount of the number of situations which have materi­ compensation or of the adjustment alized so that any alteration with offsetting this disadvantage has been particular reference to the amount of fixed at a rate lower than that which the the adjustment represents a truly retro­ holders of licences could expect in view active decision. of the procedure which had been In so far as the amount called applied the previous year and of the Commission's behaviour in July 1977. "compensation" has been provided for and fixed precisely in order to When the defendant reduced the compensate for barring the right of can­ compensatory amounts on 14 July 1977 cellation, the applicant has consequently it did not take account of the legitimate acquired a legal right to the amount of expectation of the parties concerned the adjustment which was fixed before 1 that the compensatory amounts would July 1977. continue in force for current operations or for licences already issued. Since The defendant argues that the applicant these licences represent situations which was very well able to verify in detail the had actually materialized there is in fact method of calculation which the in this case a true retroactive operation. Commission used. The first condition

The defendant replies that entitlement to upon which the protection of legitimate compensation has not been altered retro­ expectation depends, namely that the actively but only ex nunc, as from the applicant has an actual expectation, has therefore not been fulfilled. The entry into force of Regulation No defendant adheres to its conclusions 1583/77. There is nothing in that regu­ lation according to the defendant which continuing to assert that the conditions affects the rights conferred by the permitting this legal principle to be invoked have not been fulfilled and that licence upon the exporter; it is solely concerned with the calculation of the in this case there in neither an

2 The dispute relates to the application of the Community rules governing the consequences of the alterations in the value of the unit of account used for the common agricultural policy as far as concerns export licences involving the advance fixing of amounts to be paid or refunded.

3 Article 4 (1) of Regulation (EEC) No 1134/68 of the Council of 30 July 1968 laying down rules for the implementation of Regulation (EEC) No 653/68 on conditions for alterations to the value of the unit of account used for the common agricultural policy (Official Journal, English Special Edition 1968 (II), p. 396) provides that in the case of an alteration of the relationship between the parity of the currency of a Member State and the value of the unit of account, the amounts which have been fixed in advance for a transaction or part of a transaction still to be carried out after that alteration shall be adjusted by using the new parity relationship.

Nevertheless the second subparagraph of the said paragraph provides: "However, any person who has obtained advance fixing of such amounts for a specific transaction may, by written application which must reach the competent authority within thirty days of the entry into force of the measures fixing the altered amounts, obtain cancellation of the advance fixing and of the relevant document or certificate."

4 Council Regulation (EEC) No 557/76 of 15 March 1976 on the exchange rates to be applied in agriculture and repealing Regulation (EEC) No 475/75 (Official Journal 1976, No L 67, p. 1) declares that the provisions of Regulation No 1134/68 are applicable, but Article 5 (2) of Regulation (EEC) No 557/76 makes the reservation: "However Article 4 (1), second subparagraph of Regulation (EEC) No 1134/68 shall apply only if the application of the new representative rates is disadvantageous for the party concerned."

"(1) The provisions of Regulation (EEC) No 1134/68 in respect of an alteration of the relationship between the parity of the currency of a Member State and the value of the unit of account shall apply.

(2) However, the second subparagraph of Article 4 (1) of Regulation (EEC) No 1134/68 shall apply only if the application of the new representative rates is disadvantageous to the party concerned.

Before the date of application of the new rate it may be decided to offset this disadvantage by an appropriate measure. In this case, advance fixing and the certificate or document attesting thereto may not be cancelled."

In pursuance of that provision Article 2 of Commission Regulation (EEC) No 937/77 of 29 April 1977 laying down detailed rules for the application

TOPFER v COMMISSION

of Council Regulation (EEC) No 878/77 (Official Journal 1977, No L 110, p. 1) as amended by Commission Regulation (EEC) No 1372/77 of 24 June 1977 (Official Journal 1977, No L 156, p. 33) provided that:

Since it received for the exports which it effected after 15 July 1977, the date of the entry into force of the regulation at issue, compensation calculated at the rate of DM 1.87 only and not of DM 2.33 per 100 kilograms of sugar, it considers that the amendment which has been adopted of the regulation at issue is of direct and individual concern to it.

JUDGMENT OF 3. 5. 1978 — CASE 112/77

In its view that regulation is in breach of the principles contained in Regu­ lation (EEC) No 653/68 of the Council of 30 May 1968 on conditions for alterations to the value of the unit of account used for the common agri­ cultural policy (Official Journal, English Special Edition 1968 (I), p. 121) and also in Regulation (EEC) No 1134/68.

In the second place the amendment effected by the regulation at issue is a breach of the principle of the protection of legitimate expectation and is for this reason unlawful.

Admissibility

9 The Commission does not challenge the admissibility of the application. Indeed Article 2 (as amended) of Regulation No 937/77 was already a measure open to challenge within the meaning of the second paragraph of Article 173 because it was of direct and individual concern to holders of export licences issued in connexion with awards made before 26 April 1977 under partial invitations to tender.

TOPFER v COMMISSION

implementation, provides in general that in the case of an alteration of the parities of national currencies as against the unit of account the holders of import or export licences and similar documents in respect of which there has been advance fixing may apply for their cancellation.

Regulations Nos 557/76 and 878/77 have restricted this right by limiting it to cases where "the application of the new representative rates is disadvan­ tageous to the party concerned" thereby eliminating transactions of a purely speculative nature which might adversely affect the good administration of the common agricultural policy.

Nevertheless the system thus defined leaves traders free to decide individually whether it is in their interest to keep in force the arrangements which led to advance fixing or on the other hand to have them cancelled.

12 The applicant's arguments amount to the proposition that, as far as concerns white sugar, the opportunity afforded by Regulation No 1451/76 to replace the option for traders to have their licences cancelled by the option for the Community to indemnify the parties concerned for the disad­ vantage by paying appropriate compensation was itself a disadvantage for the traders affected.

In its view this latter disadvantage should be offset in the same way as the specific disadvantage flowing from the change in the exchange rates.

It is therefore fitting that only the disadvantage resulting from the change in the exchange rate be offset and that the fact that the Commission in its Regulation No 1579/76 fixed more generous compensation cannot affect this interpretation.

14 The complaint that Regulations No 653/68 and No 1134/68 have been infringed cannot be upheld.

15 The applicant also relies on the second subparagraph of Article 4 (2) of Council Regulation No 878/77 which provides that the decision to offset the disadvantage must be taken "before the date of application of the new rate" in order to show that the regulation at issue, which was adopted after that date, is illegal.

16 However, the decision "to offset this disadvantage by an appropriate measure" was adopted by Regulation No 937/77 and the amendment by the regulation at issue does not relate to the application of the system of compensation but merely to the amount of compensation.

The regulation at issue applies only to those quantities of white sugar for which customs export formalities are completed on or after its entry into force and does not therefore constitute an amendment having retroactive effect.

17 Consequently this submission cannot succeed.

The claim for compensation

21 The applicant has requested the Court in the alternative to declare that the Commission is liable for the damage which the applicant has suffered as a result of the application of Regulation No 1583/77.

22 It is clear from the foregoing that in this case everything which the Commission did was in accordance with the rules in question and that the rules must be regarded as valid.

Consequently there is nothing in the Commission's actions which could give rise to any right to compensation.

23 The claim is therefore unfounded and the application must be dismissed in its entirety.

Costs

1. Dismisses the application;

1. 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 3 May 1978.

A. Van Houtte H. Kutscher