C-122/78
ECLI:EU:C:1979:43
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JUDGMENT OF 20. 2. 1979 — CASE 122/78
In Case 122/78
REFERENCE to the Court under Article 177 of the EEC Treaty by the Tribunal Administratif, Paris, for a preliminary ruling in the action pending before that court between
S.A. Buitoni
and
Fonds d'Orientation et de Régularisation des Marchés Agricoles
on the validity and the interpretation of Article 3 of Commission Regulation No 499/76 of 5 March 1976 amending Regulation No 193/75 laying down common detailed rules for the application of the system of import and export licences and advance fixing certificates for agricultural products (Official Journal L 59, p. 18),
THE COURT,
composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, Judges,
Advocate General: F. Capotorti Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
The facts, the procedure and the obser- I — Facts and procedure vations submitted pursuant to Article 20 of the Protocol on the Statute of the Pursuant to Regulation No 193/75 of Court of Justice of the EEC may be the Commission of 17 January 1975 summarized as follows: laying down common detailed rules for
BUITONI v FORMA
the application of the system of impon the period of validity of the licences but and expon licences and advance fixing omitted to submit to the Fonds d'Orien-
certificates for agricultural products tation et de Régularisation des Marchés (Official Journal L 25, p. 10), the issue Agricoles (French Fund for the Guidance of import and export licences by the and Regulation of Agricultural Markets, national intervention agencies is hereinafter referred to as "the Fonds"), conditional upon the giving of a security the French intervention agency, the which guarantees the obligation to proof of importation within the six import or export during the period of months following the expiry of the validity of the licences. The provisions of licences (that is, before 1 August 1977). Article 17 (2) and (3) of that regulation By letter of 28 August 1977 the Fonds lay down that release of the security shall required Buitoni to pay the amount of be subject to production of proof of the security. On 6 September 1977 the completion of customs import or export company sent to the Fonds the formalities, that proof being furnished by documentary proof of discharge of its production of Copy No 1 of the licence obligation to import within the period endorsed by the office where the laid down, requesting that the security be customs formalities were completed. released. That request was rejected by Pursuant to Article 18 (1) of the regu- the Fonds on 26 October 1977. lation the security shall be released "as Buitoni then brought an action before soon as the proof referred to in Article the Tribunal Administratif, Paris, 17 (2) and (3) ... has been furnished." claiming that the decision rejecting its That regulation was amended by request for release of the security was Commission Regulation No 499/76 of ultra vires. 5 March 1976, Article 3 of which added Buitoni submitted before the national to Article 18 of Regulation No 193/75 a court that Article 3 of Regulation No paragraph (4) which reads as follows: 499/76 is contrary to the general "4. Where the proof referred to in principles of Community law in so far as Article 17 (2) and (3) has not been it disregards the rule of the proportion- furnished within the six months ality of the penalty. It was also said to be following the expiry of the licence, the contrary to the objective and spirit of the security shall be forfeit save in case of Community system of securities. force majeure. " By judgment of 22 March 1978 the The reasons behind that provision are Tribunal Administratif, Paris, after clear from the third recital in the consideration of the submissions made
preamble to that regulation, which states before it by Buitoni, stayed the that "for administrative reasons, proceedings until the Court of Justice provision should be made for the proof has given a preliminary ruling on the required for the release of the security to validity and interpretation of Article 3 of be furnished within a reasonable time, Regulation No 499/76. except in the case of force majeure". On 19 November 1976 S.A. Buitoni, a company incorporated under French law, was issued with four import licences covering 2 900 tonnes of tomato concentrate coming from third countries and deposited the corresponding security of FF 163 270. The licences issued expired on 1 February 1977. The company undertook those imports within
JUDGMENT OF 20. 2. 1979 — CASE 122/78
The judgment making the reference was the market cannot in fact justify an registered at the Court on 25 May 1978. excessive measure, where the system In accordance with Article 20 of the which has been instituted is primarily Protocol on the Statute of the Court of intended to oblige traders to effect their imports or exports. It is contrary to the Justice of the EEC written observations principle of proportionality to apply the were submitted by Buitoni, by the French same penalty in respect of non-per- Government and by the Commission of formance of the obligation which the the European Communities. security is intended to guarantee and of After hearing the report of the Judge- a mere delay in submitting proof of per- Rapporteur and the views of the formance of the obligation which has Advocate General the Court decided to been discharged correctly and within the open the oral procedure without any time-limit. It is contraryboth to the preparatory inquiry. principle of proportionality and to the principles of equality of treatment and equality in relation to public charges that II — Written observations sub- a trader who has partially completed his mitted pursuant to Article transaction and who produces proof 20 of the Protocol on the within six months of the partial Statute of the Court fulfilment of his obligation should be penalized less severely than a trader who In the submissions of Buitoni, the has discharged his obligation fully but plaintiff in the main action, the objective has not furnished proof thereof within of the Community system of securities is, the period laid down by Regulation No on the one hand, to guarantee the 499/76.
fulfilment of an obligation, freely entered In the view of the plaintiff in the main into, to import or export and, on the action the Community should either have other, to ensure that the Community and left it to the Member States to apply the the Member States have a precise national provisions in force relating to knowledge of the flow of trade within penalties for delay or have laid down less and outside the Community. severe penalties, together with provisions In the light of that system and of the to ensure fairness.
case-law of the Court of Justice it is The Commission ought further to have clear that the (secondary) objective of provided, in accordance with the general economic forecasting can in no way principle of natural justice, for the justify such drastic measures as those for mandatory transmission of formal notice which provision is made in Article 3 of prior to the expiry of the period. Regulation No 499/76. Those measures Secondly, the plaintiff in the main action should therefore be held to be invalid, by claims that Article 3 of Regulation No reason of their incompatibility both with 499/76 is contrary to the system of the fundamental principles of securities. It states that the security is Community law and with the objectives merely the guarantee of the discharge of of the system of securities. an obligation freely entered into (see the In the first place, Article 3 of Regulation No 499/76 violates the principle of pro- portionality, which is a general principle of Community law recognized by the Court of Justice (see the judgment of 17 December 1970 in Case 11/70, [1970] ECR 1125). The overall statistical view which is necessary for the equilibrium of
BUITONI FORMA
judgment of the Court of Justice of 11 The French Government, without under- May 1977 in Joined Cases 99 and taking a legal assessment of the provision 100/76, [1977] ECR 861). The sole in dispute, summarizes the way in which the case came before the courts in France purpose of Article 3 is to gather a fuller body of statistics relating to market in relation to the Community rules. factors. It is clear that in order to attain The Commission recalls that before the the objectives laid down by the regu- introduction of the provisions in dispute lation it was not necessary to provide for the periods following which securities forfeiture of the whole of the security. were forfeited varied from one Member State to another which, in its opinion, Thus the purpose of the security was led to discriminatory treatment for the substantially modified by Regulation No traders concerned and distorted the 499/76, which has the effect of making it system of securities, the purpose of a statistical instrument contrary to the which was to enable the Community to system of import and export licences, the follow with precision the market principle objective of which is to situation. There was also the need, at the encourage traders to fulfil the obligations administrative level, to introduce a which they have initially entered into. period of time on the expiry of which a In the alternative, in the event of the file could be definitively closed. Court's deciding that Regulation No The Commission rejects the argument 499/76 is valid, the plaintiff in the main that the provisions of Article 3 of Regu- action asks that it should interpret the lation No 499/76 are disproportionate to failure to produce the licence within the the objective sought and claims that a six-month period as being the result, in period of six months is more than this instance, of unusual circumstances to reasonable for the mere transmission of
be treated as a case of force majeure. The documents, especially when it is borne in plaintiff was the victim of internal mind that that period is calculated as administrative disorder during the from the expiry of the licences. Further- holiday period. Having effected its more, provision is made by the regu- importations within the period of validity lation for an exception in circumstances of the licences it was certainly not in its of force majeure in order to safeguard cases where traders are unable to interest to forego the securities. The plaintiff seeks a liberal interpretation produce the documents. such as to enable it to claim the release As regards the legal classification of the of the security. period of six months, it is in no sense a time-bar but a merely administrative time- In conclusion, the plaintiff maintains that limit. Indeed, as long as the trader has Regulation No 499/76 should be not furnished proof that the transactions declared invalid, in that it is contrary to for which the licences were issued to him the principles of proportionality, natural have been completed, the administrative justice and equality in relation to public authorities are entitled, in reliance on a charges and in that it abuses the system legal fiction, to consider that the said of securities by deflecting the principle of the provision of security from its initial purpose. In the alternative, it asks the Court, in the event of the latter's deciding that the regulation is valid, to interpret the concept of the period for compliance in a liberal manner and to find that payment of the security was not necessary in this case.
JUDGMENT OF 20. 2. 1979 — CASE 122/78
transactions have not taken place. III — Oral procedure' Contrary to the claims of the plaintiff in the main action, therefore, proof is The plaintiff in the main action, indeed required of the trader in order to represented by L. Funck-Brentano, Ad- ensure compliance with the whole system vocate of the Paris Bar, and the of licences and securities. Commission of the European Communities, represented by its Agent, The Commission contends that the P. Kalbe, and assisted by J. Delmoly, a Court should declare that consideration member of its Legal Department, of the question referred to it by the submitted oral observations. Tribunal Administratif, Paris, has disclosed no factor of such a kind as to The Advocate General delivered his
affect the validity of Article 3 of Regu- opinion at the hearing on 30 January lation No 499/76. 1979.
Decision
1 By judgment of 22 March 1978 the Tribunal Administratif, Paris, referred to the Court under Article 177 of the EEC Treaty a question relating to the validity and interpretation of Article 3 of Commission Regulation No 499/76 of 5 March 1976 amending Regulation No 193/75 of 17 January 1975 (Official Journal L 25, p. 10) laying down common detailed rules for the application of the system of import and export licences and advance fixing certificates for agricultural products (Official Journal L 59, p. 18).
2 It appears from the judgment making the reference that the plaintiff in the main action, which had obtained, subject to the provision of a security, import certificates for a quantity of tomato concentrates coming from third countries and had imported those goods within the period of validity of the licences was, by decision of the French intervention agency, refused release of the security on the ground that it had failed to submit to that agency the requisite proof of importation within the period laid down in Article 3 of Regulation No 499/76.
3 Before the national court, in which it brought an action against that decision, the plaintiff in the main action pleaded the invalidity of Article 3 of Regu- lation No 499/76, in particular on the ground of violation of the principle of proportionality, and it also claimed that that article is contrary to the purpose and spirit of the Community system of securities.
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4 In the light of those considerations the national court requested the Court of Justice to give a preliminary ruling on the validity and interpretation of the said article.
5 Pursuant to Regulation No 193/75 of the Commission of 17 January 1975, the issue of an import or export licence by the national intervention agencies is conditional upon the giving of a security calculated, as is stated in the sixth recital in the preamble to that regulation, to guarantee that the obligation to import or export will be fulfilled during the period of validity of the licence.
6 It appears from the provisions of Article 17 (2) of the regulation that release of the security shall be subject to production of proof of completion of the customs import or export formalities, which proof shall be furnished, according to the rules laid down in paragraph (3) of that article, by production of Copy No 1 of the licence endorsed by the office where those formalities were completed.
7 Pursuant to Article 18 (1) of the regulation, the security shall be released "as soon as the proof referred to in Article 17 (2) and (3) ... has been furnished".
8 By virtue of Article 18 (2) and (3) of that regulation the whole of the security shall be forfeited if the net quantity imported or exported amounts to less than 5% of the net quantity indicated in the licence, but it may be released by the Member States in proportion to the quantities of products, equal to at least that percentage, in respect of which the proofs referred to in Article 17 (2) and (3) have been furnished.
9 Article 3 of Regulation No 499/76 added to Article 18 of Regulation No 193/75 a paragraph (4) pursuant to which, where proof has not been furnished within the six months following the expiry of the licence, the security shall be forfeit save in case of force majeure.
10 It appears from the third recital in the preamble to Regulation No 499/76 that the provision was introduced "for administrative reasons".
JUDGMENT OF 20. 2. 1979 — CASE 122/78
11 The plaintiff in the main action has claimed, in particular, that it is contrary to the principle of proportionality to apply the same penalty for failure to fulfil the obligation to import, which the security is intended to guarantee, and for mere delay in submission of the proofs of fulfilment of the obligation, which has been discharged correctly and within the prescribed period.
12 In its written observations the Commission maintains that Article 3 of Regu- lation No 499/76 is justified by the fact that before its introduction the forfeiture of securities occurred on the expiry of different periods from one Member State to another, which led both to discriminatory treatment for traders and a distortion of the system of securities, the purpose of that system being to enable the Community to have precise knowledge of the market situation.
13 There was, in addition, the need, at the administrative level, to set a period for the definitive closure of files.
14 However, the Commission also emphasized, during the oral procedure, the importance, within the system of import and export licences, of the infor- mational rôle played by the submission by traders to the competent national agencies of the proofs, in the form of Copy No 1 of the licence endorsed by the office where the customs formalities were completed, of completion of the impon or expon transactions.
15 In its submission, indeed, it is only by that means that the national agencies and, through them, the Community authorities, can obtain exact knowledge of the number of transactions actually effected on the basis of the licences.
16 As regards the problem of proportionality, it should be examined whether the penalty laid down in Article 3 of Regulation No 499/76 for failure to comply with the period for presentation of the proofs prescribed by that provision exceeds what is appropriate and necessary to attain the objective sought.
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17 In this respect it should be recalled, on the one hand, as appears from the sixth recital in the preamble to Regulation No 193/75, that the system of securities is intended to guarantee that the obligation to import or export, which has been voluntarily undertaken, will be fulfilled during the period of validity of the licence issued for that purpose.
18 As already stated, pursuant to Article 18 (2) and (3) of that regulation the penalty laid down in case of failure to fulfil the obligation is, in essence, proportionate to the degree of that failure.
19 On the other hand, the provisions of Article 3 of Regulation No 499/76, prompted by "administrative reasons", provide not only for a period within which those proofs must be furnished but also the loss of the whole of the security in the event of failure to comply with that period.
20 That fixed penalty, which is applied to an infringement which is considerably less serious than that of failure to fulfil the obligation which the security itself is intended to guarantee, which is sanctioned by an essentially pro- portionate penalty, must therefore be held to be excessively severe in relation to the objectives of administrative efficiency in the context of the system of import and export licences.
21 Although, in view of the inconvenience caused by the belated production of proofs, the Commission was entitled to introduce the period laid down in Article 3 of Regulation No 499/76 for the furnishing of proof, it should have sanctioned failure to comply with that period only with a penalty considerably less onerous for those concerned than that prescribing the loss of the whole of the security and more closely allied to the practical effects of such an omission.
22 Indeed, even if administrative efficiency requires that files should not remain open indefinitely, it must, however, be noted that failure to comply with such a period will be exceptional in nature in that it is contrary to the very interests of the exporter or importer concerned, who will normally seek release of his security as soon as possible.
23 It is accordingly appropriate to reply to the question raised by the national court that Article 3 of Regulation No 499/76 is invalid.
JUDGMENT OF 20. 2. 1979 — CASE 122/78
Costs
24 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable.
25 As these proceedings are, in so far as the parties to the main action are concerned, 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 question referred to it by the Tribunal Administratif, Paris, by judgment of 22 March 1978, hereby rules:
Article 3 of Commission Regulation No 499/76 of 5 March 1976 is invalid.
Kutscher Mertens de Wilmars Mackenzie Stuart Donner Pescatore
Sørensen O'Keeffe Bosco Touffait
Delivered in open court in Luxembourg on 20 February 1979.
A. Van Houtte H. Kutscher
Registrar President