C-250/78

the Commission of the European Communities, represented by its Legal Adviser, R. Wainwright, and by J. Sack, a member of its Legal Department, acting as Agents, with an address for service in Luxembourg at the office of O. Montako, a member of its Legal Department, Jean Monnet Building, Kirchberg, defendant,

APPLICATION at the present stage of the procedure relating to the question whether the Commission may set off a claim relating to the recovery of a wrongly paid amount against the applicant's claim for compensation,

THE COURT

composed of: J. Mertens de Wilmars, President, P. Pescatore and A. O'Keeffe (Presidents of Chambers), Lord Mackenzie Stuart, G. Bosco, T. Koopmans and O. Due, Judges,

Advocate General: G. F. Mancini Registrar: H. A. Rühi, Principal Administrator

gives the following

1. In an interlocutory judgment of 4 October 1979 in Joined Cases 241, 242 On 18 March 1978 the applicant and 245 to 250/78 (DGV and Others v assigned the claim for compensation Council and Commission [1979] ECR against the Community, which was the 3017), the Court ordered the European subject of the action for compensation Economic Community to pay the for damage brought on 10 November applicants "the amounts equivalent to the 1978, to Curavest NV, a company production refunds on maize gritz used established in Curaçao. Curavest waived by the brewing industry which each of repayment of a loan of HFL 900 000 those undertakings would have been which it granted to the applicant in 1976. entitled to receive if, during the period from 1 August 1975 to 19 October 1977, the use of maize for the production of Curavest assigned 2.5% of the amount gritz had conferred an entitlement to the of the compensation to the lawyers same refunds as the use of maize for the representing Contifex in the present manufacture of starch". proceedings, with a minimum of D M 7 800 plus 6.5% VAT on the sum assigned. According to the document of assignment, the assignment by Curavest 2. The parties in this case have agreed had priority over that made by Contifex. that the Community should pay to the applicant the sum of D M 311 836.93. The applicant did not notify the The Commission however raises as a Commission of the latter assignment set-off against the applicant's claim until 16 February 1981. On 18 March for compensation a claim relating to 1980 the German authorities decided the reimbursement of export refunds that the applicant must repay them the and monetary compensatory amounts sum of D M 736 106.81, being export wrongly paid to the applicant. refunds wrongly paid to the applicant during 1976 and 1977. The present stage of the proceedings concerns the question whether the claim On 3 April 1981 Curavest, in its turn, for compensation is extinguished by way notified the Commission of the of set-off. assignment in question.

On 10 August .19.81 the Commission payment of compensation from the obtained from the German authorities Community, without the latťer's being an assignment of the claim for able to raise by way of set-off a claim in reimbursement of the wrongly paid a larger amount. refunds. The Commission takes the view that By letter of 8 October 1981 sent to even if the assignment must be Curavest, the Commission protested considered valid the set-off may be against the' assignment made by the raised against Curavest in accordance applicant and stated that it was of the with the principle stated, inter alia, in ^opinion that the claim for compensation paragraph 409 of the Bürgerliches was extinguished by way of set-off. Gesetzbuch [Civil Code] according to which, in the case of- assignment of a 4. In the . course of the written claim, the legal position of the debtor procedure, subsequent to the interlo­ must not be weakened: since the cutory judgment of 4 October 1979 the Commission's claim arose during 1976 applicant, in its pleading of 17 March and 1977, the claim for compensation 1981, amended its original· conclusions in assigned to Curavest was already capable which it claimed that the Community of being the subject of a plea of set-off should pay it D M 311 838.93, and it now at the time of the assignment. claims that the Community should be ordered to pay that sum to Curavest. By Such a result also follows from the fact telex message of 15 January 1982 that that the Commission contested the company asked to be substituted as assignment between the applicant and applicant in this case. By order of 22 Curavest in accordance with paragraphs September 1982, the Court refused 1, 2, 3 (1) point 1., 5, 7 and 11 (2) point Curavest's request. 1. of the Anfechtungsgesetz (a German statute concerning the judicial an­ 5. The Commissión asks the Court to nulment, otherwise than in bankruptcy declare that the applicant's ' claim for proceedings, of the acts of the debtor). compensation is extinguished by way of The legal act in question was performed set-off. by a debtor (Contifex) with the intention, known to the other party (Curavest), of causing damage to its II — Submissions and arguments creditors. The fact that Curavest was of t h e p a r t i e s aware of the applicant's intention to act to the detriment of its creditors may be inferred from the fact that the 1. The validity of the assignment of the assignment was made some 15 days after claim for compensation and the the applicant's decision to go into possibility of set-off liquidation.

(b) The applicant argues that according 406 of the Bürgerliches Gesetzbuch in to paragraph 406 of the Bürgerliches respect of the set-off raised by the Gesetzbuch the debtor under the Commission. Since the set-off concerns a assigned claim cannot raise a set-off claim for the recovery of payments made against the assignee when, at the time of under Community agricultural legis- the acquisition of the claim, he knew of lation, the German authorities and the the assignment or where the claim did Commission must be considered as not become enforceable until after he constituting a single entity. When they acquired that knowledge and at a date acquired the debt against the applicant, subsequent to that of the assigned claim. they had not been informed of the These alternatives exist in this case. applicant's assignment of the claim for compensation to Curavest. Nor, according to paragraph 393 of the Bürgerliches Gesetzbuch, is a set-off The Commission considers that the allowed against a claim arising from an applicant's right to compensation from unlawful act intentionally committed. the Community is not a right based upon an unlawful act intentionally committed. Such rules also exist in Community law. Article 393 of the Bürgerliches Gesetz- buch does not, therefore, apply. The other objections which the Com- mission bases upon an assignment of (d) The Council concurs with the assets within the meaning of paragraph observations of the Commission. 419 of the Bürgerliches Gesetzbuch and upon the Anfechtungsgesetz raise, according to the applicant, matters of 2. The request for payment to Curavest national law and must be judged by the national courts. According to the Commission, Curavest's request is inadmissible by virtue of .The applicant observes, however, that Article 42 (2) of the Rules of Procedure Curavest has no liability under paragraph since it is not founded upon matters of 419 of the Bürgerliches Gesetzbuch law or of fact which came to light in the because the applicant's rights to course of the written procedure. compensation from the Community were not, at the time of the assignment, the The Commission further observes that applicant's sole asset. the interlocutory judgment of 4 October 1979 has already ruled in favour of the Furthermore, according to German case- applicant. It would be contrary to pro- law, Curavest is entitled to be paid in- cedural principles for it to be possible for priority, since its claim against the a final decision to be given in favour of applicant exceeds the claim for Curavest. compensation against the defendant.

2 The applicant was a limited partnership of which one of the two limited partners, Mr D. K., was also the manager. The partner having unlimited liability was a limited liability company, Contifex Getreideprodukte GmbH, of which Mr D. K. was also one of the three members. Prior to bringing the action, the two undertakings went into voluntary liquidation, and Mr D. K. also acted as liquidator. Following a "change of business name, which was required by the authorities in charge of the commercial register and which was the subject of a decision dated 13 January 1979, the undertaking is now called DEKA Getreideprodukte GmbH & Co. KG i. L. (in liquidation). Both the liquidation and the change of business name were made known to the Court only on 19 November 1981 by a procedural document lodged by the applicant.

3 By an interlocutory judgment of 4 October 1979 given in Joined Cases 241, 242 and 245 to 250/78 DGV and Others v Council and Commission [1979] ECR 3017, the Court ordered the European Economic Community to pay to

DEKA v EEC

a number of undertakings, including the applicant, sums equivalent to the production refunds for maize gritz used by the brewing industry to which each of those undertakings would have been entitled if, during the period from 1 August 1975 to 19 October 1977, the use of maize for the production of gritz had conferred an entitlement to the same refunds as the use of maize for the manufacture of starch.

4 Under the terms of the judgment the parties were required to transmit to the Court a statement of the amounts of compensation arrived at by agreement, or in the absence of agreement, a statement of their views with supporting figures. Costs were reserved.

JUDGMENT OF 1. 3. 1983 — CASE 250/78

whose book-value on 1 January 1977 was D M 686 227. The debts owed by the applicant to the two banks in favour of whom it had granted prior charges on the same plant and machinery amounted to D M 1 318 388.49 on 31 December 1976.

The loan granted by Curavest is entered in the applicant's balance sheets in the sum of DM 860 000 on 1 January 1977 and of D M 930 548.10 on 31 December 1977. However, it appears from the accountants' report that there were further financial relations between Curavest on the one hand and the applicant and its manager on the other, and the applicant has stated that the total debt amounted to HFL 1 400 000 on 31 December 1977 and to HFL 1 775 000 on 31 December 1978.

7 On 3 March 1978 it was decided to liquidate the two Contifex undertakings. An out-of-court arrangement involving relinquishment of rights in the assets was reached with the applicant's creditors other than Curavest on the basis of a partial satisfaction of the creditors to the extent of 2 5 % . The arrangement entered into force on 31 July 1978. In order to enable this arrangement to be made, Curavest, by an agreement made on 18 March 1978, waived its claim on condition that the applicant's claims, including the claim for compensation from the Community, be assigned to it.

s The assignment was notified to the Commission by the applicant on 16 February 1981 and by Curavest on 3 April 1981, that is to say almost three years after the contract of assignment and after the applicant had brought this action and obtained judgment against the Community in the above-mentioned interlocutory judgment.

i2 Since the question whether the assignment constitutes an act which is valid as against the Community authorities must be considered as a preliminary issue, not only with regard to the other submissions on the substance of the case raised by the Commission, but also with regard to the objection of inadmissibility, it is appropriate to examine it first.

JUDGMENT OF 1. 3. 1983 — CASE 250/78

i3 In this respect, it must be borne in mind that the Community rules on production or export refunds may give rise not only to debts which traders may raise against the authorities entrusted with administering the system, but also to claims, directed against traders, for the reimbursement of wrongly paid sums whose recovery is required by the Community rules. Those rules may thus give rise, as between authorities and traders, to reciprocal and even related claims which are an appropriate subject for set-off.

u In the case of an insolvent trader, such a set-off may in fact constitute the only practicable way open to the authorities to recover the wrongly paid sums. In that case the assignment of the trader's claims against the authorities to a third party can, depending on the circumstances, amount to an abusive transaction.

i7 However, since national provisions dealing with the setting aside of acts of a debtor as a general rule safeguard the interests of a third party acting in good faith, it is appropriate to examine not only the position of the assignor but also that of the assignee, namely Curavest.

is In this respect it appears from the text of the assignment itself that Curavest was perfectly well aware of the financial position of the assignor as well as of the objective, described above, which the latter was seeking to achieve by means of the assignment. This fact as well as the conditions, which were unusual to say the least, under which Curavest granted an extraordinarily large loan to Contifex, given the latter's situation, the commonalty of interests which is suggested by the further financial relations mentioned in the accountant's report and the fact that the action was brought and pro- secuted almost to its conclusion not by the assignee, Curavest, but by the assignor, Contifex, in the unexplained absence, until February 1981, of any notification to the Community of the assignment, warrant the finding by the Court that Curavest cannot rely upon good faith worthy of being protected.

i9 It follows from the foregoing that the claim for an order for the payment by the Commission of the amount of the compensation to Curavest is unfounded and that it must therefore be dismissed without there being any necessity to consider the objections of inadmissibility.

20 As far as the applicant's original claim is concerned, it is sufficient to make a finding that the claim for compensation is extinguished by way of set-off. It is true that the applicant has pleaded a rule of German law according to which there can be no set-off in respect of a claim arising from an intentional unlawful act. Without its being necessary to decide whether that rule has its equivalent in Community law, it is sufficient to point out that the abolition by the Council of the refunds for the production of maize gritż cannot be said to constitute such an act.

hereby:

1. Dismisses the application;

2. Orders the applicant to pay the costs.

Mertens de Wilmars Pescatore O'Keeffe

Mackenzie Stuart Bosco Koopmans Due

Delivered in open court in Luxembourg on 1 March 1983.