C-152/80

JUDGMENT OF 20. 5. 1981 — CASE 152/80

suffered whilst maintaining measures cannot therefore in itself confer on to assure a co-ordinated application the exporter a right not to be thereof". subjected to the consequences on By restricting the ambit of the relief trade of a fall in the value of a clause to imports or exports effected national currency. under binding contracts which were concluded before the monetary measure referred to in Article 1, 3. Regulation No 1608/74, being a Article 2 (1) of Regulation No provision for discretionary relief, is 1608/74 does not thwart the aims of designed to mitigate in the appro- that regulation but confines itself priate circumstances of fact and of within their bounds as defined by all law the hardship which may result for that is stated in the preamble to that traders from the application of the monetary compensatory amounts and regulation, which is designed to helps to prevent the introduction of ensure that the true function of the the amounts from proving excessively monetary compensatory amounts is burdensome for some of them. In the preserved. circumstances it cannot be held that 2. The sole purpose of issue of an export such a regulation breaches the licence is to authorize export of the principle of proportionality by not goods concerned and not to affording traders more ample oppor- guarantee the conditions under which tunity to benefit from a clause the goods will in fact be exported. It providing for discretionary relief.

In Case 1 5 2 / 8 0

R E F E R E N C E to the C o u r t u n d e r Article 177 of the T r e a t y by the T r i b u n a l Administratif [Administrative C o u r t ] , Paris, for a preliminary ruling in the action p e n d i n g before that court between

composed of: P. Pescatore, President of the Second Chamber acting as President, Lord Mackenzie Stuart and T. Koopmans (Presidents of Chambers), A. O'Keeffe, G. Bosco, A. Touffait, O. Due, U. Everling and A. Chloros, Judges,

Advocate General: G. Reischl Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and Issues

I— Facts and written procedure (hereinafter referred to as “the FIRS”) was consulted by sugar exporters wishing to know whether Article 1 of Regulation No 1608/74 of the Commission of 26 On 15 March 1976 the French June 1974, the so-called “discretionary Government decided to allow the French relief”, could be applied in respect of franc to float. Following that decision export contracts concluded under monetary compensatory amounts were binding conditions after 15 March 1976. introduced as from 25 March 1976. That article states: Under the common organization of the market in sugar those amounts were originally fixed at the rate of FF 4.46 per “Where monetary compensatory 100 kg of white sugar. amounts are introduced or increased as a result of the fixing or the amendment of the central rate or of the representative The monetary compensatory amounts rate of the currency of a Member State remained more or less stable for almost used in the context of the common agri- four months. After 23 July 1976, cultural policy, or [as a result of] the however, as a result of the fall in value decision of a Member State to permit its of the French currency, they rose currency to float in relation to the progressively until by 27 December 1976 currencies of the Member States where they had reached the level, in the sugar the fluctuation of the rates of exchange sector, of FF 32.67. is kept within a maximum spread of 2.25%, the Member State in question shall be authorized to waive, on a Subsequently the Fonds d'Intervention et discretionary basis and according to the de Régularisation du Marché du Sucre following conditions, the monetary

compensatory amount or so much or the refusal of the exemption referred thereof as corresponds to the increase". to in Article 1 of the regulation . . . " and that "it leaves to the charge of the Member States alone the decision concerning the refusal to apply the The FIRS replied in the negative. The discretionary measure". Since the action same reply was given by the Commission was in substance directed against to the Syndicat de Commerce des Sucres measures taken by the national auth- [Sugar Trade Association]. Article 2 (1) orities pursuant to provisions of of Regulation No 1608/74 states that Community law the Court judged that "Article 1 shall apply only to imports the conditions of admissibility laid down and exports carried out pursuant to in Article 178 and the second paragraph binding contracts concluded before the of Article 215 of the Treaty were not monetary measures referred to in that fulfilled. article". Both the Commission and the FIRS, however, maintained that the unforseeable and abnormal fluctuation of the French franc between 23 July and 27 After the Court's decision the under- December 1976 could not be considered takings in question submitted to the as a monetary event within the meaning FIRS a claim for repayment, the implied of the above-quoted provision. rejection of which is the subject of litigation before the Tribunal Adminis- tratif, Paris. That court was asked in an alternative submission to refer three In January and February 1977 Debayser question to the Court of Justice for a SA, Sucre-Union SA and Jean Lion SA preliminary ruling, two of which it each brought an action against the refused to refer on the ground that, first, Commission before the Court of Justice. the concept of "monetary measure" in The applications, based on Articles 178 Article 2 (1) of Regulation No 1608/74 and 215 of the EEC Treaty, sought was perfectly clear and, secondly, it was damages for the loss suffered by the not necessary to decide whether the applicants through the failure to apply regulations altering the monetary the provision for discretionary relief in compensatory amounts which were Article 1 of Regulation No 1608/74 to adopted by the Commission between 23 exports of sugar carried out on the basis July and 3 December 1976 were of binding contracts after 15 March applicable to exports carried out by the 1976. applicants during that same period, the decision at issue being based only on Regulation No 1608/74.

The judgment making the reference was As to the allegation that the principle of received at the Court Registry on 25 the protection of legitimate expectation June 1980. in the case of the traders has been breached, the Commission notes that Written observations were submitted that principle cannot be relied upon in pursuant to Article 20 of the Protocol on connexion with monetary compensatory the Statute of the Court of Justice of the amounts, which necessarily vary in EEC by Debayser SA, Sucre-Union SA accordance with alterations in exchange and Jean Lion SA, represented by Funck- rates. Moreover, such a submission can Brentano, Avocats Associés of the Paris only be founded on a sufficiently serious Bar, and by the French Government, breach of a superior rule of law for the represented by Thierry Le Roy of the protection of the individual.

the said cases. In those cases the Commission contended, first, that it would be II — O b s e r v a t i o n s s u b m i t t e d p u r - excessive to interpret rules based on s u a n t t o A r t i c l e 20 of t h e grounds of natural justice as imposing an P r o t o c o l on t h e S t a t u t e of obligation to take into consideration all t h e C o u r t of J u s t i c e of t h e

concerned. It is impossible to imagine ment of fixed parities. how such a system could function if traders were to be exempted wholly or In pursuance of those aims, which are partially from the impact of the defined in the Treaty and re-stated in the monetary compensatory amounts in basic Regulation No 974/71, Regulation consideration of the particular circum- N o 1608/74 is designed to protect stances of each case. traders in the process of performing

binding contracts expressed in French monetary compensatory amount is purely francs from the incidence of monetary a corrective factor, since it is solely compensatory amounts which in the intended to prevent exporters from circumstances have lost their compensa- receiving for the products they sell a tory character to become charges price higher than the basic national price payable on export. which is not altered by the depreciation of the national currency, thereby thwarting the Community regulations on free movement and competition. The restrictive criteria adopted in Article 2 (1) of the regulation with reference to its application prevent flexibility in applying the discretionary relief clause In the case of the plaintiffs in the main and do not provide protection in each action, the monetary compensatory individual case, contrary to the objective amounts levied when the export was of the regulation. effected had lost the corrective nature envisaged by the regulation because the conditions to which the commercial transaction was subject (the amount of The provision compels the plaintiffs in the refund, and the sale prices expressed the main action to bear the very losses in French francs) had been fixed several which Regulation No 1608/74 was months before the date of export, when designed to avert and which they could there was no justification for the amount have avoided since they do in fact fulfil levied. the conditions laid down in Article 2 (2) of the regulation for granting exemption from monetary compensatory amounts. The Commission was sufficiently well aware of the unlawfulness of the system as applied to introduce by means of In the submission of the plaintiffs in the Regulation No 243/78 of 1 February main action Article 2 (1) of Regulation 1978, after the events detailed above, the No 1608/74 prevents the latter from option of fixing the amounts in advance fulfilling its purpose of complementing in order to take into account the fact Regulation N o 974/71, and thereby that "the monetary compensatory infringes Articles 2 and 3 of the Treaty amount does not always correspond to establishing the principle of promoting the rate on which commercial contracts within the Community increased stability are based". and the free movement of goods by eliminating as between Member States customs duties and quantitative re- Next, the plaintiffs in the main action strictions on the import and export of allege that the above-mentioned Article 2 goods and all other measures having (1) has had discriminatory effects in their equivalent effect. case.

In the second half of 1976 that situation brought about a noticeable reduction in In the case in hand the amounts which French sugar exports, inducing the were levied no longer fulfilled the French Government to inform the purpose defined in Regulation No Commission of its concern "in view of 974/71 the sudden alterations in the flow of its traditional exports . which are not unconnected with the high level reached by the monetary compensatory amounts Although it seems normal that traders from 1976". should be exposed, for reasons per- taining to the common good, to the disadvantages arising from minor fluc- The existence of fundamental anomalies tuations which are reflected in in conditions of competition was corresponding fluctuations in the admitted by the Commission which, in monetary compensatory amounts, it is the above-mentioned Regulation No quite a different matter when the. fluc- 243/78, eliminated discrimination by tuations are large and unforeseeable. organizing the advance fixing of the monetary compensatory amounts under tendering procedures, that is to say, by The disadvantages thus imposed on the freezing the level of the monetary plaintiffs were not necessary to avoid compensatory amounts for a given disturbances in trade in agricultural transaction at the date of the award of products, for it was possible to modify the tender on which the level of the the legislation, as has been seen sub- refund was fixed. There is no retroactive sequently. measure in the regulation, however, which means that for the period prior to its publication Article 2 (1) of Regulation No 1608/74 remained unlawful. The last two submissions of the plaintiffs in the main action concern the principles of legal certainty and of the protection Thirdly, the plaintiffs in the main action of legitimate expectation respectively. invoke the principle of proportionality inasmuch as it prohibits the Community authorities from taking measures other As to the principle of legal certainty, the than those which are strictly necessary in plaintiffs claim that in the case-law of order to pursue the aims of the common the Court it has been established that agricultural policy, taking into account under this principle a new provision the existing circumstances. imposing charges is not applicable to previously existing situations if the Community has provided a trader with a The principle of proportionality, enun- guarantee that the legal provisions, ciated in numerous decisions of the applicable to a commercial transaction Court, is included in the preamble to initiated before the new rules, still stand. Regulation No 974/71 introducing the The issue of an export licence by the monetary compensatory amounts, where Commission constitutes such a guaran- it is stated that the amounts must be such tee. In practice the Commission has

— Regulation N o 1608/74 is general in scope and its purpose is to put an end For the same reasons the issue to the to the harmful consequences of plaintiffs of export licences which events in the monetary sphere; included a refund fixed in advance should have guaranteed them the continuance of the prevailing economic — Although the possibility of an in- conditions when they carried out the crease in the monetary compensatory exports on the basis of those licences. amounts as the result of disparities appearing in currency exchange rates was not expressly provided for in the regulation, it is comprised in the As to the protection of legitimate objectives defined in the preamble; expectation, the plaintiffs vigorously reject the Commission's view that breach of the principle can only be pleaded where alteration of the Community rules — The Commission had stated that has affected the existing legal situation. it would follow with particular The position is the same whether by attention the application of the being applied immediately a new rule provisions laid down "in order to disrupts an economic situation which has take, if necessary, further measures not yet disappeared, and which was and to determine whether this system created under the old rules, or whether should be maintained". inadequate rules are applied in new economic circumstances. The increase in the monetary compensatory amounts gave rise to a new economic situation The Commission is therefore in breach calling for an appropriate application of of the principle that legitimate expec- the legislation, and in particular the tation must be protected. discretionary relief, in order that it might continue to fulfil its purpose. The French Government observes that the interpretation of the concept of "monetary measures" put forward by the The plaintiffs acted on the assumption plaintiffs in the national court appears to that they were protected against it to run counter to both the actual

wording of Regulation N o 1608/74 and Court, the fact remains that the power to the system of monetary compensatory grant exemption lies exclusively within amounts introduced by Regulation N o the discretion of the competent auth- 974/71 in which Regulation No 1608/74 orities of the Member State alone and has its part. may in no circumstances be assimilated to a right not to be charged the monetary compensatory amount. It is the opinion of the French Government that the wording of Regu- lation N o 1608/74 is free of all It is not that question of interpretation, ambiguity. It is clear from the provisions however, which has been referred to in Articles 1 and 2 that: the Court of Justice, but a question concerning the validity of Article 2 (1) of Regulation N o 1608/74. — In the first place, the provisions for exemption in Article 1 apply only to The French Government considers that exports carried out under binding the reply to the question should be in contracts made before the "monetary the negative, no factor having been measure" referred to in that article established which is capable of affecting occurred; the validity of the above-mentioned provision. — In the second place, the Community legislature intended the term In substance, the court making the "monetary measure" to designate reference asks whether the restricted only the cases listed clearly and nature of that provision offends against restrictively in Article 1. certain fundamental principles of Community law, namely the principle of equal treatment of traders whose In any case, the issue has already been situations are comparable and the settled both by the court making the principle of respect for legal certainty in reference, arbiter of questions of "droit regard to contracts in the process of commun" [in French law, the law being performed. applicable to all but special categories] under Community law, which found that As to the first point, it should be noted the wording is clear on this point, and by that there is no discrimination against the Commission which administers the monetary compensatory amounts and is traders within the territory of a single the author of the text in question. Member State who are all treated in the same manner. By contrast it is quite reasonable to maintain that that equality Moreover, Regulation No 1608/74 is disturbed if the traders are in provided Member States with no more comparable situations but located in the than an option. The discretionary nature territory of two different Member States. of the power to grant exemption from Nevertheless, the distortion of compe- the monetary compensatory amounts tition which results from a situation of results expressly from both the preamble that kind cannot be imputed to an and the body of the regulation itself. omission on the part of the Community legislature, which drew up Regulation N o 1608/74, but is due to the absence Even if the interpretation advanced by among the Member States of a the plaintiffs as to the scope of the regu- harmonized monetary policy, an lation were to be confirmed by the objective factor independent of the

The French Government also fails to share the opinion that imperfections in The truth is that if the autonomous Regulation No 1608/74 cause it to decision on the part of a government to offend against the principle of legal support or not to support its floating certainty protecting contracts in the currency may qualify * as a "monetary process of being performed. measure" referred to in Article 1 of Regulation N o 1608/74, the result would be that the regulation could be It is clear from the case-law of the Court applied after every variation in exchange of Justice that traders have no objective rates, meaning that traders would be right to the maintanance in their current permanently relieved of the effect of form of rules concerning the calculation, differences registered between the time the amount or the circumstances in at which the contract was concluded and which the monetary compensatory the time at which its performance was amounts are to be applied, the latter completed. having been introduced not for the benefit of traders but to serve the Regulation N o 1608/74 provides traders common interest. with protection against a sudden change in the monetary compensatory amounts resulting from an unforeseen decision to The system of monetary compensatory float a currency. But where a decision to amounts does not give rise to a duty on float it introduces on a long-term basis a the part of the Community to provide situation of monetary instability as far as permanent or total protection against the traders are concerned, it would be exchange risks to which traders are prudent management for them to review exposed, but solely a duty to compensate earlier arrangements made in stable for fluctuations in exchange rates monetary conditions and to make whenever that appears necessary. allowance for exchange risks when considering export contracts. Were it otherwise, the inevitable conclusion must Thus the machinery of the monetary be that the machinery of monetary compensatory amounts does not involve compensatory amounts is a means any financial commitment on the part of whereby the Community provides the Community toward traders, and insurance against the exchange risks allows the former, in the common faced by traders, which was clearly not interest and within the wide margin of the intention of the Community discretion which has been granted to it, legislature in introducing the system of to alter without prior notice both the monetary compensatory amounts. method of calculation and the level of the monetary compensatory amounts and to abolish any payment (or levy) of such amounts by means of a decision in the form of a repeal. III — Oral p r o c e d u r e

3 According to Article 1 of Regulation N o 1608/74:

"Where monetary compensatory amounts are introduced or increased as a result of the fixing or the amendment of the central rate or of the rep- resentative rate of the currency of a Member State used in the context of the common agricultural policy, or [as a result of] the decision of a Member State to permit its currency to float in relation to the currencies of the Member States where the fluctuation of the rates of exchange is kept within a maximum spread of 2.25%, the Member State in question shall be auth-

JUDGMENT OF 20. 5. 1981 — CASE 152/80

orized to waive, on a discretionary basis and according to the following conditions, the monetary compensatory amount or so much thereof as corresponds to the increase".

Article 2 (1) of the same regulation states that:

"Article 1 shall apply only to imports and exports carried out pursuant to binding contracts concluded before the monetary measures referred to in that article".

7 Having brought an action against the Commission before this Court under the second paragraph of Article 215 of the EEC Treaty for a refund, in the form of damages, of the increases in the monetary compensatory amounts which they claimed they should not have had to pay, which action was dismissed by the Court as inadmissible in a judgment of 2 March 1978 (Joined Cases 12, 18 and 21/77 [1978] ECR 553) on the ground that the action concerned measures adopted by the national authorities, the applicants brought an action for annulment against the FIRS before the Tribunal Administratif de Paris. That application is directed against the refusal of that institution to apply the provision for discretionary relief in Regulation No 1608/74 in the case of exports effected under binding contracts concluded after 15 March 1976 and performed before 23 July 1976, and seeks reimbursement of the increase in the monetary compensatory amounts which were paid on completion of export contracts which had been concluded prior to the date of each increase.

8 In the course of those proceedings they requested the national court to refer to this Court for a preliminary ruling questions concerning, inter alia, the interpretation of the words "monetary measure" in Article 2 (1) of Regu- lation No 1608/74 and, if those words must be interpreted as applying in the circumstances exclusively to the decision taken by the French Government on 15 March 1976, the validity of the above-mentioned provision in so far as it excludes from the ambit of the said regulation binding contracts concluded after 15 March 1976.

1 3 In view of those words the argument put forward in the proceedings by the plaintiffs in the main action to the effect that Article 2 (1) of Regulation No 1608/74 prevents the regulation from achieving its end because of the restrictive criterion it adopts is based on a misconstruction of the nature and purpose of that regulation. By restricting the ambit of Regulation N o 1608/74 to imports or exports effected under binding contracts which were concluded before the monetary measure referred to in Article 1 that provision does not thwart the aims of that regulation but confines itself within the bounds of those aims as defined by all that is stated in the preamble to that regulation, which is designed to ensure that the true function of the monetary compensatory amounts is preserved.

1 4 Indeed, such an argument fails to have regard for the requirements pertaining to the orderly and efficient operation of the monetary compensatory amounts which must, in order to achieve their purpose of

DEBAYSER v FIRS

compensating for alterations occurring in the fixing of the central rate or the representative rate for a national currency used for the purposes of the common agricultural policy, or in the stability of the exchange rate for such a currency, be permitted to apply, apart from the option left to the Member States to make use of the clause for discretionary relief in certain individual cases, in a general way to imports and exports of the agricultural products concerned.

15 The plaintiffs in the main action alleged further that Article 2 (1) is contrary to the principle of legal certainty which is inherent in the Community legal order. In their argument they maintained that once they had obtained export licences in respect of the contracts concerned in the dispute the issue of those licences ought to guarantee their right to complete their exports subject to the rules in force on the date of such issue without being exposed to charges resulting from an alteration in the monetary situation and the rules concerned therewith.

19 The fact that subsequently the Commission provided, in Regulation No 243/78 of 1 February 1978 (Official Journal L 37, p. 5) that holders of export licences may ask for and obtain advance fixing of the monetary compensatory amounts is not decisive. Even if the unstable rate of increase of the monetary compensatory amounts appeared to the Commission when it adopted Regulation N o 243/78 to create a new situation justifying an appro- priate amendment of the Community legislation which existed at the time, it does not follow that that alteration is sufficient to justify the conclusion that a clause providing discretionary relief previously in application was unduly restrictive in nature. Moreover, the third recital in the preamble to that regu- lation reveals that the subject-matter governed by the latter regulation and that to which Regulation No 1608/74 may be applied is not identical, for Regulation No 243/78 allows the advance fixing of monetary compensatory amounts only for products in respect of which the levy or the refund too, has been fixed in advance.

20 It was also submitted by the plaintiffs in the main action that Article 2 (1) of Regulation No 1608/74 of the Commission breaches the principle that legitimate expectation must be protected.

21 However, the result of the foregoing is that it is unquestionably prudent management on the part of a trader faced with the decision of a Member State to allow its national currency to float, and faced with the fall in the value of that currency, to review, once the system of monetary compensatory amounts has been introduced, the conditions on the basis of which the contracts to be performed during the period of monetary fluctuation are concluded.

25 On those grounds, the reply to the national court must be that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Article 2 (1) of Regulation No 1608/74 of the Commission of 26 June 1974.

Costs

The costs incurred by the French Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. As this case is, in so far as the parties to the main proceedings are concerned, in the nature of a step in the proceedings before the national court, the decision on costs is a matter for that court.

OPINION OF MR REISCHL — CASE 152/80

On those grounds,

THE COURT,

O P I N I O N OF MR ADVOCATE GENERAL REISCHL DELIVERED O N 9 APRIL 1981 1

Mr President, in their opinion unlawful, failure or Members of the Court, refusal to apply the clause providing for discretionary relief in Article 1 of its Debayser, Sucre-Union and Jean Lion Regulation No 1608/74 of 26 June 1974 brought actions against the Commission on special provisions in respect of before the Court of Justice in January monetary compensatory amounts and February 1977 for damages for the (Official Journal L 170 of 27 June 1974, loss suffered through the Commission's, p. 38) to sugar exports carried out on the 1 — Translated from the German.