C-54/81

BUNDESANSTALT FÜR LANDWIRTSCHAFTLICHE MARKTORDNUNG [Federal Office for the Organization of Agricultural Markets], Frankfurt am Main,

on the interpretation of a number of provisions of the EEC Treaty and principles of Community law to enable the national court to decide whether Article 11 (1) of the Order of the Federal Minister of Food, Agriculture and Foresto' of 8 August 1968 concerning premiums for the denaturing of cereals (Bundesanzeiger No 148 of 10 August 1968, p. 1) is compatible with those provisions and principles,

T H E C O U R T (Second Chamber)

composed of: O. Due, President of Chamber, A. Chloros and F. Grévisse. Judges,

Advocate General: P. VerLoren van Themaat Registrar: H. A. Rühi, Principal Administrator

gives the following

The facts of the case, the course of 8 August 1968 concerning premiums for the procedure and the observations the denaturing of cereals (Bundes- submitted under Article 20 of the anzeiger No 148 of 10 August 1968) — Protocol on the Statute of the Court of as amended by the Order of the same Justice of the European Economic Minister of 14 February 1973 concerning Community may be summarized as the adjustment of the interest rates laid follows: down in orders implementing the common organizations of the markets (Bundesanzeiger No 34 of 17 Februar)' I — Facts and written p r o c e d u r e 1973). The Federal Minister of Food, Agri- 1. In 1970 the defendant in the main culture and Forestry was empowered to action in this case, the Bundesanstalt enact rules on interest by the German für landwirtschaftliche Marktordnung Law on the Implementation of the [Federal Office for the Organization of Common Organizations of the Markets Agricultural Markets, hereinafter (Marktordnungsgesetz) of 31 August referred to as "the Bundesanstalt"] 1972 (Bundesgesetzblatt I, p. 1617). granted the plaintiff in the main action, Article 12 of that Law provides that: the undertaking Fromme, premiums for the denaturing of common wheat "The orders referred to in Article 9 amounting to DM 128 497.62 on the [authorizing the Federal Minister to basis of Regulation No 172/67/EEC of adopt the necessary measures] may the Council of 27 June 1967 on general provide for interest at a rate not rules governing the denaturing of wheat exceeding 3% above the discount rate of and rye of breadmaking quality (Official the German Federal Bank to be charged Journal, English Special Edition 1967, in the case of demands for the refund of p. 139). benefits wrongly paid and in the case of the late payment of levies". 2. By a number of decisions dated 8 December 1977 the Bundesanstalt sub- 3. The Bundesanstalt rejected the sequently demanded repayment of those objections made by the plaintiff in the premiums on the ground that the main action against the said decisions conditions for entitlement to the whereupon the plaintiff brought an premium were not met. By a number of action before the Verwaltungsgericht decisions dated 17 January 1980 the Frankfun am Main. Bundesanstalt also demanded interest calculated from the date of payment of 4. The Verwaltungsgericht stayed the the premium until the date of its proceedings and in accordance with repayment at a rate of 3 % above the Article 177 of the EEC Treaty submitted discount rate of the German Federal the following questions to the Court for Bank and in any event at not less than a preliminary ruling: 6'/2%. It relied for this purpose on the second subparagraph of Article 11 (1) of "1. Is it compatible with the Treaty the Order of the Federal Minister of establishing the European Economic Food, Agriculture and Forestry of Community for the Federal Republic

of Germany to charge on undue organizations of the markets it may no payments of denaturing premiums longer issue substantive rules of national interest calculated from the day of law in this field. Accordingly, in the view payment at 3% above the prevailing of the Verwaltungsgericht, the Federal discount rate of the German Federal Republic is also debarred from adopting Bank but in any event at not less provisions of substantive law governing than 6.5°/o, without being authorized the reclaiming of subsidies which have to do so by any provision of been wrongly paid. The claim for interest Community law? is not based on a mere procedural provision but is a matter of substantive law. Nor does it constitute a penal 2. If the answer to the foregoing is in provision, if only because the claim is not the negative: related to any wrongdoing. Does Article 8(1) of Regulation (EEC) N o 729/70 of the Council of As to the second question, the Verwal- 21 April 1970 on the financing of tungsgericht emphasizes that Anicie 8(1) the common agricultural policy of Regulation (EEC) No 729/70 of the (Official Journal, English Special Council of 21 April 1970 on the Edition 1970 (I), p. 218) confer any financing of the common agricultural authority entitling the Federal policy (Official Journal, English Special Republic to charge interest of the Edition 1970 (I), p. 218) empowers the kind mentioned in Question 1 ? Member States to adopt measures which enable only the actual sums lost to be recovered, which in this case are the 3. If the answer to the foregoing is in denaturing premiums. On the other hand the negative: Is there any other it does not contain any authoritv for provision or general principle of establishing rules on payments which go Community law from which such beyond mere recovery. authority may be deduced?" Interest charged to cancel out the benefit obtained from unjust enrichment does 5. In its order making reference to the not constitute an integral part of the Court the Verwaltungsgericht observes payment made without any legal basis with regard to the first question that it is but is a separate ancillary claim. clear from the decisions of the Court that where the Member States have The court making the reference for transferred legislative powers to the a preliminar)· ruling observes that Community which has exercised them in according to the second subparagraph of the form of directly applicable law, they Article 8(2) of Regulation (EEC) No are no longer empowered to alter or add 729/70 the sums recovered are to be to that law. The Court permits only two paid to the paying authorities or bodies exceptions to that principle one of which The interest charged by the defendam in is concerned with the adoption of pro- the main action is not paid back to the cedural provisions and the other with the European Agricultural Guidance and adoption of penal provisions. Guarantee Fund (hereinafter referred io as "the Fund") but is credited to the Federal Budget. Therefore the sums in As the Federal Republic of Germany has question are not those referred to in transferred power to the Community to Article 8 of Regulation (EEC) No legislate on the subject of the common 729/70.

The claim for restitution of the gain Justice of the European Economic obtained is based on the legal doctrine Community written observations were that a person should not profit from lodged by the plaintiff in the main benefits which he has obtained without action, represented by J. Giindisch, being legally entitled thereto but that Rechtsanwalt, Hamburg, the Govern- such gain belongs to the person suffering ment of the Federal Republic of the loss. However, the interest charged Germany, represented by M. Seidel, by the Federal Republic is not paid to Ministerialrat, and H . H. Boie, Ober- the Fund but is retained by the Federal regierungsrat, both at the Federal Republic itself. Therefore the charging of Ministry for Economic Affairs, acting as interest does not lead to the restitution Agents, and the Commission represented of subsidies wrongly granted but only to by M. Hilf, a member of its Legal a transfer of the unjust enrichment from Department, acting as Agent. the Community trader to the Member States. Upon hearing the report of the Judge- Rapporteur and the views of the Even if the view were taken that Article Advocate General the Court decided to 8 of Regulation (EEC) N o 729/70 open the oral procedure without any empowers Member States to claim back, preparatory inquiry. in addition to the sum improperly paid, the gain obtained from that sum, it is in By order of 30 September 1981 the any event not permissible to place a Court decided to assign the case to the national value on gain without taking the Second Chamber. circumstances of each case into account; nor is it permissible to assess that gain at a flat rate in the form of a fixed rate of interest. For since there are no Community provisions on the nature and II — W r i t t e n o b s e r v a t i o n s s u b - amount of the flat rate, it would be m i t t e d p u r s u a n t to A r t i c l e possible for it to be determined 20 of t h e P r o t o c o l on t h e differently by the Member States as they S t a t u t e of t h e C o u r t ( E E C ) thought fit; however, that would necessarily lead to unequal treatment of traders in the various Member States. 1. In the view of the pUintiff in the main action Community law does not prevent Member States from adopting As regards the third question, the rules of substantive law on the reclaiming Verwaltungsgericht observes that there is of wrongly-granted subsidies. It submits also no unwritten principle of that the charging of interest on sums Community law which empowers the recovered forms part of those rules and Member State to charge interest on refers in this regard to Article 8 of Regu- wrongly-granted denaturing premiums. lation (EEC) No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970 (I), 6. The order for reference was p. 218) according to which advantages registered at the Court on 11 March granted from the Community funds as a 1981. result of irregularities are to be recovered "in accordance with national provisions laid down by law, regulation or In accordance with Anicie 20 of the administrative action". Protocol of the Statute of the Court of

Those limits of Community law have been exceeded first because the German Nor, in this regard, as the Verwaliungs- legislation in question has the effect of gericht also rightly states, is such a result altering the scope of Article 8 of Regu- justified from the point of view of the lation No 729/70. withdrawal of unjust enrichment. It is the Fund alone which has suffered the loss. Therefore the charging of interest does not lead to the restitution or recover)' of Within the framework of that basic subsidies wrongly paid but only to the provision of Community law there is in shifting of the unjust enrichment from principle nothing which excludes rules the trader to the Member State in on interest provided that the interest question. charged on the amounts to be repaid represents no more than the recovery of the gain which the recipient of the wrongly-paid benefit has made from it in Quite apan from those considerations the meantime. From that it follows, first, relating to the recipient of the payment, that the gain must accrue to the person the German rules on interest contravene from whose resources the wrongly-paid the scope of the basic provision of benefit was granted and, secondly, that Community law on the recoven· of

FROMME v BALM

Therefore the only general rule of Further to that point made by the German law which may be applicable is Verwaltungsgericht the plaintiff in the the principle according to which, by main action observes that it has not analogy with the rule of civil law laid made any gain from the denaturing down in Article 291 of the German Civil premium for common wheat which was Code, interest of 4 % is payable from the wrongly paid to it. Repayment of the date on which the Court is seised, that is premium was claimed because it was to say as from the date on which the subsequently discovered, on the occasion action was brought and not, as in the of a check carried out on the plaintiff's case, interest at 3 % above the discount business documents, that during the rate of the German Federal Bank as from period in question too little of the the date on which the wrongly-granted colorant PatentbUu had been used. It is aid was received. however accepted that, despite the fact that the common wheat in question may have had too little colouring, it was used The plaintiff in the main action therefore for its intended purpose, namely for proposes that the questions submitted for animal-feed. Thus the denaturing a prelimina'ry ruling by the Verwaltungs- premium for common wheat was also gericht Frankfurt am Main should be used in order to bring down the high answered as follows: price of bread-grain to the lower price of feed-grain. Therefore the plaintiff in the main action did not acquire any " 1 . It is compatible with the Treaty advantage from the aid, the grant of establishing the European Economic which was wrong only on formal Community for Member States to grounds, but immediately passed on the adopt interest rules in respect of the advantage to its customers, namely the restitution of aids wrongly paid by farmers who bought grain from it. Since the Community, in particular de- it made no gain from the aid, which was naturing premiums for common wrongly granted to it only for purely wheat. However, those rules must formal reasons, no gain is recoverable. not affect the scope of the provisions of Community law on the recovery of pecuniary advantages, especially The German rules on interest contravene those contained in Regulation (EEC) in particular the limits which the Court No 729/70 of the Council of 21 has placed on provisions of national law April 1970 on the financing of the

common agricultural policy (Official States, in implemention of the common Journal, English Special Edition agricultural policy, to regulate all 1970 (I), p. 218). Further, they must ancillary matters relating to the recovery correspond to the same rules laid of benefits wrongly paid. down for the payment of interest and on the restitution of similar aids (subsidies) granted under national That follows from the allocation of law. Therefore the rules on interest functions between the Community and contained in the second subpara- the Member States whereby the graph of Article 11 (1) of the Order legislatures of the Member States in of the Federal Minister of Food, principle retain the power to implement Agriculture and Forestry of 8 August and ensure the application of rules of 1968 concerning premiums for the Community law, especially where the denaturing of cereals (Bundes- Community legislature has not yet been anzeiger N o 148 of 10 August able to adopt particular implementing 1968), in the version contained in measures. the Order of 14 February 1973 concerning the adjustment of rules on interest contained in orders The implementation of the common implementing the common organiz- agricultural policy in particular is based ations of the markets (Bundes- on that allocation of functions. anzeiger N o 34 of 17 February 1973), constitute a breach of Community law inasmuch as they In the view of the Federal Government provide for the payment of interest the contested rules on interest in the case at a rate of 3 % above the prevailing of a demand for reimbursement of discount rate of the German Federal wrongly-paid denaturing premiums Bank as from the date of payment of constitute one of the matters left to the wrongly-granted aid. Member Sutes for the purpose of ensuring the operation of the organiz- ation of the market. At present there are 2. Article 8(1) of Regulation (EEC) no Community rules governing the No 729/70 of the Council of charging of interest. The Council has not 21 April 1970 on the financing of the been able to agree on a proposal made common agricultural policy confers by the Commission for general rules on no authority enabling the Federal the charging of interest on amounts Republic of Germany to charge which have been paid from the European interest of the kind mentioned in Agricultural Guidance and Guarantee Question 1. Fund or by way of food aid and which must be recovered. Nevertheless, it is in principle unanimously accepted wit':, .-t 3. There is, furthermore, no other the Community that this kind of claim provision or general principle of for reimbursement must be accompanied Community law from which such by a claim for interest. Every Member authority may be inferred." State has rules to that effect and the application of that legal principle serves the proper implementation of the 2. The Government of the Federal common organizations of the markets Republic of Germany takes the view that since the possibility of making a financial the answer to the first question must be gain from benefits wrongly acquired in the affirmative. In the present state of might in the end even encourage irregu- Community law it is for the Member larities.

The Federal Government is not unaware order making the reference concerning of the fact that Community law places the date from which interest runs, the some limits on the application of national level of interest and the fixed rate. law where it is applied to implement the common organization of the market. Those limits stem primarily from the The Federal Government also observes rules of the basic Community regulation that, from the point of view of itself the scope of which may not be Community law, it makes no difference restricted (judgments of the Court of whether the rules on interest of the 18 February 1970 in Case 40/69 Member States require interest to be Bollmann [1970] ECR 69, of 18 June calculated on the basis of the gain 1970 in Case 74/69 Krohn [1970] ECR actually proven in each case or whether 451 and in Balkan). interest is calculated on the basis of general rules which place a hypothetical figure on the advantage obtained by taking into account prevailing market Secondly, the application of national law conditions. must conform with the general rules of Community law. In particular it must not lead to discrimination against traders by taking the form of rules which are The Federal Government considers that stricter than comparable implementing its view is borne out by the way in which rules of national law (judgments of the the relevant secondary law of the Court in Cases 33/76, REWE [1976] Community is framed. It believes that in ECR 1989, Ferwerda and Dairy Foods). particular from Regulation No 729/70 of the Council and Council Directive No 76/308/EEC of 15 March 1976 on mutual assistance for the recovery of As to that point the Federal Government claims resulting from operations forming takes the view that the charging of pan of the system of financing the interest on claims for the repayment of European Agricultural Guidance and denaturing premiums meets those Guarantee Fund, and of agricultural requirements. It admits that the levies and customs duties (Official application of national rules on interest Journal, L 73, p. 18), it is possible to might create differences in the burdens infer a clear indication that the borne in the various Member States; Community legislature leaves the however, those differences, which can be question of interest to national provisions eliminated only through harmonization, laid down by law, regulation or must be accepted. administrative action.

granted only on the conditions contained answered in the negative, there is no in the Community regulations and that need to reply to them. any infringement of Community legislation by traders is appropriately punished. To that end the Member States must carry out checks and in 3. The Commission states that addition, by applying the relevant Community law does not contain any national implementing rules, take all general provision dealing with the measures necessary to prevent and deal charging of interest or any specific with irregularities and to recover sums provision on the charging of interest lost as a result of irregularities or where a claim is made for the repayment negligence. The charging of interest by of wrongly-paid premiums. In principle Member States on claims for the therefore the Community leaves it to the repayment of sums lost as the result of Member States to implement Community irregularities or negligence helps to law within their territory by applying achieve those two objectives. their own national provisions laid down by law, regulation or administrative action.

FROMME v BALM

JUDGMENT OF 6. 5. 1982 — CASE 54/Sl

FROMME v BALM

1. It would be contrary to Community principle of legal certainty for a law for the repayment of sums Member State to apply fixed interest wrongly received under Community rates and to do so in a measure which law to be subject to rules less is solely concerned with the favourable to the Community than application of Community law. those applicable to comparable cases governed by national law.

2. One reason for the difference might The undertaking Fromme emphasized, be that the application of Community and the Commission agreed, that an law causes greater problems of interest rate applying to cases governed supervision than the application of by Community law which diverges too national law. far from the national level might impair the effect of Community law for producers would no longer have 3. Since some provisiors of Community recourse to denaturing because of the law stipulate interest rates which are risk of paying high interest would be higher than those charged in this case greater. Member States cannot be criticized for laying down comparable rates. The Advocate General delivered his 4. From the point of view of Community opinion at the sitting on 21 January law it is in conformity with the 1982.

Decision

2 Those questions were raised in an action between a German dealer in agri- cultural products, the undertaking Wilhelm Fromme, and the Bundesanstalt für landwirtschaftliche Marktordnung [Federal Office for the Organization of Agricultural Markets, hereinafter referred to as "the Bundesanstalt"] which claimed from that undertaking the repayment of premiums for the denaturing of common wheat, which are provided for by Regulation N o 172/67/EEC of the Council of 27 June 1967 on general rules governing the denaturing of wheat and rye of bread-making quality (Official Journal, English Special Edition 1967, p. 139). Both parties agree that those premiums were wrongly paid. By separate decisions and pursuant to the aforesaid orders the Bundesanstalt claimed from the undertaking Fromme interested calculated from the date of payment of the premium until the date of its repayment at a rate of 3 % above the discount rate of the Federal German Bank and in any event at a rate not less than 6V2 %. Fromme's objection to those decisions was rejected and it then brought an action contesting them before the Verwaltungsgericht.

3 The questions referred to the Court of Justice by that court were worded as follows:

" 1 . Is it compatible with the Treaty establishing the European Economic Community for the Federal Republic of Germany to charge on undue payments of denaturing premiums interest calculated from the day of payment at 3 % above the prevailing discount rate of the German Federal Bank but in any e%'ent at not less than 6-5 %, without being authorized to do so by any provision of Community law?

é However, in its above-mentioned decisions the Court has placed limits on both the express reference to national laws contained in Article 8 of Regu- lation N o 729/70 and the implied reference which has been acknowledged to be necessary in the absence of Community rules. Thus the application of national law must not adversely affect the scope or impair the effectiveness of Community law by making the recovery of sums wrongly paid impossible in practice. Nor may it make the recovery of such sums subject to conditions or detailed rules less favourable than those which apply to similar procedures governed by national law alone. In such matters the national authorities must proceed with the same care as they exercise in implementing corresponding national laws so as not to impair, in any way, the effectiveness of Community law.

7 In establishing those limits on the reference to national law the Court has held with regard to the relationship to procedures for determining similar, but purely national, disputes that the application of national law on the basis of that reference must be effected in a non-discriminatory manner as compared with those procedures. The rule against discrimination so enunciated also implies that the obligations imposed by national legislation on undertakings which have been wrongly granted pecuniary advantages

JUDGMENT OF 6. 5. 19S2 — CASE 54/81

based on Community law must not be more stringent than those imposed on undertakings which have wrongly received similar advantages based on national law, assuming, however, that the two groups of recipients are in comparable situations and therefore that that different treatment is not objectively justifiable.

FROMME v BALM

so far as the parties to the main action are concerned, in the nature of a step m the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,

T H E C O U R T (Second Chamber)

in answer to the questions submitted to it by the Verwaltungsgericht Frankfurt am Main by order of 5 February 1981, hereby rules:

It is compatible with Community law in its present state for a Member State to charge, in accordance with the rules of its own national law, interest on wrongly-paid Community denaturing premiums provided that those rules do not give rise to any difference in treatment which is not objectively justified between traders receiving such premiums and those who, as the case may be, obtain similar benefits of a purely national nature.