C-42/79

on the interpretation of the concept of "force majeure" appearing in Article 4 (3) of Regulation (EEC) No 1308/68 of the Commission of 28 August 1968 on the sale of butter from public storage for exportation (Journal Officiel L 214 of 29 August 1968, p. 10),

THE COURT (First Chamber),

composed of: A. O'Keeffe, President of Chamber, J. Mertens de Wilmars and G. Bosco, Judges,

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

gives the following

MILCH-, FETT- UND EIERKONTOR BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

intervention agency". them out over a long period of time, continually thinking out fresh variations for their actions. Ehlers deceived the Eier-Kontor resold that butter to Butter- plaintiff, Norden, the defendant and the Import-Norden GmbH (hereinafter customs authorities. The criminal court referred to as "Norden") which has its finally stated that Ehlers had six previous registered office in the free port of convictions, three after being given a Hamburg: Eier-Kontor held shares in power of attorney by Norden and before Norden. However, the 168 tonnes of the conclusion of the contract of sale butter in question never reached the free between Norden and Eier-Kontor. port of Hamburg since Norden's duly authorized agent [Prokurist], Mr Ehlers, The Bundesanstalt first released the misappropriated them and sold them on the domestic market. security prescribed in Article 4 of Regu- lation No 1308/68. However, when it discovered that the butter had not in fact In connexion with those events been exported it requested Eier-Kontor Mr Ehlers was sentenced by the Land- to return the processing security to it and gericht [District Court] Hamburg, by decided that the security must be judgment of 3 April 1974, to a number considered forfeit, in accordance with of years' imprisonment inter alia for Article 4 (3). That provision reads as misappropriation with aggravating follows:

JUDGMENT OF 13. 12. 1979 — CASE 42/79

undertaking which bought the butter 3. The order for reference was received from it to put the butter to the use pre- scribed by Regulation No 1308/68 and at the Court Registry on 12 March 1979. secondly, whether Ehler's misappropri- ation of the butter constitutes with In accordance with Article 20 of the regard to Eier-Kontor a case of force Protocol on the Statute of the Court of majeure for the purpose of Community law. Justice written observations were submitted by Milch-, Fett- und Eier- Kontor GmbH, represented by P. Wendt In order to have these points clarified the and H. E. Heyn, of the Hamburg Bar, Verwaltungsgericht decided on 22 by the Bundesanstalt für Landwirt- February 1979 to stay the proceedings schaftliche Marktordnung represented by and to refer, pursuant to Article 177 of Mr Grobosch and Mr Tiedemann, acting the EEC Treaty, the following questions as Agents, and by the. Commission of the to the Court of Justice: European Communities, represented by J. Sack, a member of its Legal Department, acting as Agent. "1. Does a case of force majeure within the meaning of Article 4 (3) of Regulation (EEC) No 1308/68 of The Court, upon hearing the report of the Commission of 28 August 1968 the Judge-Rapporteur and the views of and the relevant case-law of the the Advocate General, decided to open Court of Justice also arise if a duly the oral procedure without a preliminary authorized agent acting without inquiry. permission and to the detriment of the exporting undertaking makes the exports impossible through criminal It also decided pursuant to Article 95 (1) offences and, if the answer to this of the Rules of Procedure to assign the question is in the affirmative, is the case to the First Chamber.

emphasized that it is necessary as a Eier-Kontor, the plaintiff in the main general rule to have an effective action, states that it has to admit that guarantee that the objectives of the the objective of Regulation (EEC) Community provisions have been No 1308/68 is undoubtedly the expor- complied with. tation of butter purchased at a reduced price from the intervention agency and Nevertheless if that were the end of the that the attainment of that objective is ensured by the provision of a security. If matter the position of the first purchaser the goods are not exported the security is who resells the butter for export would be less favourable than that of the forfeit. The purchaser indeed is not purchaser who himself carries out the personally obliged to fulfil the obligation he entered into to export the butter since exportation: he would in fact be subject the resale of the butter on the domestic to the same obligations as the latter but would not, on the other hand, be able to market is not prohibited by the provisions of Regulation No 1308/68 but rely on force majeure where his there is no doubt that the security can be obligations were not fulfilled. It must released only if the butter has been thus be accepted that the person exported. The sole exception to that rule concerned may plead force majeure even is in the case of force majeure the in cases where the impossibility of existence of which the plaintiff wishes to exporting the butter intended for export confronts a subsequent purchaser. prove in the present case.

The Bundesanstalt, the defendant in the The Commission of the European main action, observes that, although Communities observes that, unlike other Regulation No 1308/68 does not more recent regulations, Regulation prohibit the resale on the domestic No 1308/68 has a very simple structure market of intervention butter purchased and does not regulate, inter alia, the at a reduced price, the purchaser never- question of a possible resale of butter on theless remains liable on pain of the domestic market.

If the exportation is not carried out the security is forfeit not only pursuant to Question 1 Articles 3 and 4 of Regulation No 1308/68 but also pursuant to the Eier-Kontor submits that in practical contract governed by private law terms the court making the reference is concluded with the intervention agency. asking to what extent the purchaser is It is true that the purchaser is not liable for the actions of other persons in obliged personally to implement the connexion with the obligation to export. obligation to effect the exportation, but pursuant to a general principle of the law of contract common to all the Member It must be recalled first of all that a States, he is liable for the fault of the person is clearly liable for his own persons on whom he relies for the actions which means in the case of an implementation of his contractual undertaking that it is liable for the intra obligation. vires acts of the natural persons who represent it. If that principle were applied It might perhaps be possible to stretch to this particular case it would have to be the interpretation of Article 4 (3) of held that Eier-Kontor could not itself be

MILCH-. FETT- UND EIERKONTOR v BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

held liable for the acts of a person who treated as supplies for victualling vessels. was not empowered under national law Since Norden was in fact a ships' to represent it. supplier with its registered office in the free port of Hamburg the sale of butter to it by the plaintiff constitutes not a Where the person concerned, instead of resale on the domestic market but an

What is ultimately the position of the third party other than a representative of subseqent purchaser? He is not bound by the purchaser. However, even an Erfül- the instructions of the seller of the lungsgehilfe is no longer acting in goods, only by the stipulations of the implementation of the obligation of the contract of sale. Nevertheless, according purchaser but as an ordinary third party to German case-law he is regarded as an if he acts without the knowledge of the Erfüllungsgehilfe [agent of the obligor purchaser and contrary to his wishes. In for the fulfilment of an obligation] since such a case the purchaser is not liable for his cooperation is necessary for the per- the acts of that person. formance of the obligor's export obligation. It would, however, be possible to arrive at a different conclusion if, as the The conduct of the subsequent purchaser national court envisages in the second is furthermore controlled by the limb of the first question, it were possible purchaser who may ensure, by means of to maintain that Norden (or Eier-Kontor contractual agreement, that the if it were held that Eier-Kontor in fact

obligation to export the goods is decided on appointments at Norden), in fulfilled. Nevertheless, in certain cases its choice of the duly authorized agent, such agreements are unnecessary. Article was in breach of its duty to exercise due 2 of Regulation (EEC) No 1041/67 in care and diligence [Sorgfaltspflicht]. fact provides that supplies for victualling sea-going vessels are to be treated as exports from the Community. Under the Apart from the fact that in the present German regulation of 24 January 1968 case Ehlers was appointed duly auth- concerning EEC export refunds, adopted orized agent at a time when he had no in implementation of Regulation (EEC) convictions the general question arises No 1041/67, goods "purchased by a whether the engagement of an employee ships' supplier in a free port" are to be when it is known that he has a criminal

problems must be resolved on the merits There are two means of showing that of each case having regard to the cir- Eier-Kontor must be vicariously liable cumstances, in particular to the nature for the fault of Norden's duly authorized and gravity of the offences but also on a agent. personal appraisal of the individual in question. The first consists in emphasizing that the facts set out by the court making the The Bundesanstalt observes that in this reference establish that, from an case the butter was not exported because economic point of view, Eier-Kontor it had been misappropriated by an and Norden were a single entity. employee of the subsequent purchaser, Norden. Although from the legal point of view Norden must be considered as an independent legal person it may easily be That cannot, however, be considered as shown that many reasons (of a tax, case of force majeure even it were proved economic or organizational nature) may that Norden had exercised care in prompt an undertaking to establish an choosing its employees and had independent legal person rather than a supervised them sufficiently. In fact force branch (in this case the reason is that as majeure is excluded where the person a legal person Norden was able to concerned is at fault. A principal is liable choose the free port in Hamburg for its not only for his own fault but also for registered place of business). In fact, that of his legal representatives and then, the sale of the butter to the agents. Norden undertaking must be interpreted as if Eier-Kontor had entrusted the

conclusion is reached by considering the extensive powers normally exercised by a question from a different point of view. duly appointed agent and which, on the It is sufficient to observe that the general other, cannot maintain that in any event principle of law that a principal is liable such supervision would have been for the acts of his agents also appears to ineffective because of the cunning of apply where the representative of the Mr Ehlers as his misappropriations were successful tenderer in his turn entrusts ultimately discovered. the fulfilment of the obligation to export goods to other persons (in particular to The Commission therefore proposes that his employees). Since the principal the Court of Justice should reply as obligor is thus liable for his agent for the follows to the first question: fulfilment of an obligation [Erfül- lungsgehilfe] and the latter is liable in his "2. a) A purchaser who is obliged to turn for his own agent for the fulfilment export butter pursuant to the of an obligation it follows that the fault provisions in question (Article 4 of the latter must be considered as the (1) and (3) of Regulation fault of the principal obligor. No 1308/68 is liable for the

criminal offence, the employer must is bound to institute special supervise him particularly carefully. If supervision and safeguards. If such the employer fails to exercise such measures do not amount to more

vigilance he cannot rely on the principle than ordinary supervision the under- of force majeure. That is the position in taking cannot seek to rely on the the present case of Eier-Kontor and principle of force majeure within the Norden which, on the one hand, had meaning of Community law if the an absolute duty to exercise strict duly authorized agent is guilty of supervision having regard to the misappropriation."

JUDGMENT OF 13. 12. 1979 — CASE 42/79

2 The questions were raised in the course of an action between the Bun- desanstalt für Landwirtschaftliche Marktordnung, in its capacity as the German agricultural intervention agency in the market in milk and milk products, and the plaintiff in the main action which, in the period between 21 July and 4 October 1970, purchased from that intervention agency certain quantities of butter from public storage at a reduced price pursuant to Regu- lation No 1308/68 of the Commission. In accordance with Article 3 of that regulation the butter should have been exported within a period of 30 days

MILCH-, FETT- UND EIERKONTOR BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG

after its sale by the intervention agency. The purchaser resold the butter in question to an undertaking which, however, failed to expon it. In view of that the Bundesanstalt decided that the securities which had been provided by the first purchaser in accordance with Article 4 of the said Regulation No 1308/68 should be forfeit and it also claimed the reimbursement of the

securities already released. The purchaser challenged that decision on the ground that the butter from storage had been diverted from its lawful destination by the duly authorized agent of the undertaking to which the butter had been resold and that, consequently, its diversion constitutes a case of force majeure which, pursuant to Article 4 (3) of Regulation No 1308/68, means that the securities lodged must be released.

3 The national court found that economic links existed between the purchaser and the said undertaking and that the duly authorized agent of the latter undertaking had from 1 October 1968 to 31 May 1969 been an employee of the purchaser and had criminal convictions, a number of which antedated the last sale of the butter in question, and submitted to the Court the following two questions:

The first problem

5 The Court of Justice, in its judgment of 11 May 1977 (Joined Cases 99 and 100/76 "De Beste Boter" and Hoche [1977] ECR 861) concerning the interpretation of Regulation (EEC) No 1259/72 of the Commission of 16 June 1972 on the disposal of butter at a reduced price to certain Community processing undertakings (Official Journal, English Special Edition 1972 (II), p. 559) ruled that the effectiveness of the arrangements established by that regulation, which provides for the sale of butter from storage at a reduced price to certain undertakings on condition that they give an undertaking guaranteed by a security that they will process that butter or have it processed into certain foodstuffs, would be "seriously compromised if the acceptance of an obligation to process by a subsequent purchaser who was not himself under any legal obligation to the competent authority were regarded as sufficiently discharging an undertaking entered into by the suc- cessful tenderer against a deposit". The Court accordingly concluded that "even where the successful tenderer does not himself carry out processing it is necessary to establish that the processed products comply with the conditions laid down in Article 6 (1) (c) of the regulation and that they have been produced within the period therein prescribed before the deposit may be released".

6 Regulation No 1308/68 of the Commission closely resembles the said Regu- lation No 1259/72 both with regard to its objectives and the essential content of its provisions. Regulation No 1308/68 in fact is also intended to provide a remedy for the large quantities of butter held in public storage by the agricultural intervention agencies and for that purpose makes special arrangements for the sale by such agencies of surplus butter at a reduced price to persons who undertake to export it to non-member countries within

7 In view of that basic similarity it follows that the principles laid down by the Court of Justice in the context of Regulation No 1259/72 concerning the obligation of the purchaser of butter from storage to ensure that it reaches its proper destination also apply in the context of Regulation No 1308/68. The fact that the latter regulation does not expressly contain a provision analagous to Article 10 (5) of Regulation No 1259/72 in accordance with which "rights and obligations arising out of the invitation to tender shall not be transferable" does not mean that Regulation No 1308/68 intended to enable the purchaser to free himself of the obligation to ensure that the butter is actually exported within the period prescribed by the regulation by reselling the butter. For the reasons set out above such a right would in fact open a loophole in the system laid down by Regulation No 1308/68 to such an extent as to jeopardize its objectives and operation. Furthermore the provisions of Article 4 (3) of the said regulation, which render release of the security dependent on the actual exportation of the butter, lay down clearly the condition that, so long as the butter has not been exported, the first purchaser of the butter from storage, who has in the meantime resold it, may not recover his security but, save in cases of force majeure, is liable for the acts of the person with whom he has entered into an agreement.

8 For those reasons it is necessary to reply that Regulation No 1308/68 of the Commission must be interpreted to mean that where the purchaser of butter from storage does not himself export the butter but resells it to a third party for export he is liable for any wrongful act on the part of the other contracting party and can recover his security only if the butter is actually exported within the period prescribed by the regulation.

10 The objectives and the provisions of the relevant agricultural legislation show that the concept of force majeure within the meaning of the said first subpara- graph of Article 4 (3) must be understood as referring to absolute impossibility caused by abnormal circumstances unrelated to the purchaser of the butter from storage, the consequences of which could not have been avoided except at the cost of excessive sacrifices, despite the exercise of all due care. Whilst Regulation No 1308/68 does not contain any provisions formally prohibiting the resale of butter from storage the fact none the less remains that the nature of the operations necessary for the exportation of the product as prescribed, which do not call for the intervention of specialized undertakings, and the shortness of the period allowed for the exportation show that under the system set up by Regulation No 1308/68 the butter sold by the intervention agency was not normally intended to form the subject- matter of subsequent commercial transactions within the Community. If, in spite of the background of those provisions, the first purchaser of the butter from storage decides to resell it to a third party for the purposes of expor- tation he thereby undertakes, with regard to the agricultural intervention agency, all the risks which a diligent trader can and should reasonably foresee in the context of that transaction, including that of misappropriation of the butter through the fraudulent conduct of a duly authorized agent of the subsequent purchaser. The possibility of such conduct was not a risk which could in no way have been foreseen by the reseller, especially in the circumstances described by the national court. Consequently, the fact that, as a result of the said misappropriation, the reseller was unable to ensure that the goods were actually exported cannot be considered as an exceptional and abnormal circumstance fulfilling the conditions for a case of force majeure within the meaning of the first subparagraph of Article 4 (3) of Regulation No 1308/68 in such a way as to release the initial purchaser of the butter from storage from his obligation to the intervention agency to ensure that the butter reaches the proper destination.

in answer to the questions referred to it by the Verwaltungsgericht Frankfurt am Main, by an order of 22 February 1979, hereby rules:

1. Regulation (EEC) No 1308/68 of the Commission must be interpreted to mean that where the purchaser of butter from storage does not himself export the butter but resells-it to a third party for export he is liable for any wrongful act on the part of the other contracting party and can recover his security only if the butter is actually exported within the period prescribed by the regulation.

2. Where the purchaser of the butter from storage referred to in Regu- lation No 1308/68 of the Commission of 28 August 1968 resells it to a third party for export in accordance with that regulation, the fact that it is impossible to export the butter because it has been diverted from its proper destination by the criminal acts of a duly authorized

OPINION OF MR CAPOTORTI — CASE 42/79

agent of that third party to the detriment of the latter does not constitute a case of force majeure within the meaning of the first subparagraph of Article 4 (3) of the said regulation and consequently does not lead to the release of the security provided in accordance with Article 4 (1) of that regulation in respect of consignments of butter which have not been exported.

O'Keeffe Mertens de Wilmars Bosco

1. The proceedings for a preliminary ruling to which my opinion relates In the period from 21 July to 14 October concern the interpretation of Article 4 1970 the German undertaking Milch-, (3) of Regulation (EEC) No 1308/68 of Fett-und Eier-Kontor (hereinalter the Commission of 28 August 1968 on referred to as "Eier-Kontor") bought the sale of butter from public storage for from the German intervention agency exportation and relates in particular to (the Bundesanstalt für Landwirt- the definition of the concept of force schaftliche Marktordnung, hereinatter majeure embodied in that article. Clari- referred to as "the Bundesanstalt") some fication was also requested of the scope 168 tonnes of butter in a number of of principles laid down in the judgment consignments at the particularly advan- of the Court of 11 May 1977 in Joined tageous price prescribed by the said regu- Cases 99 and 100/76 concerning the lation. The butter had to be exponed extent of the obligations and liability of within 30 days of sale. Eier-Kontor paid

1 — Translated from the Italian.