C-256/81

J U D G M E N T OF T H E COURT (FIFTH CHAMBER) 18 MAY 1983 '

Pauls Agriculture Limited v Council and Commission of the European Communities

(Gritz — Liability)

Case 256/81

Non-contractual liability — Damage — Compensation — Claim for interest — Permissibility (EEC Treaty, second para, ofArt. 215)

A claim for interest submitted in relation common to the legal systems of the to the non-contractual liability of the Member States to which that provision Community under the second paragraph refers. Such a claim is therefore, as a of Article 215 of the Treaty must be general rule, permissible. considered in the light of the principles

APPLICATION under Article 173 of the EEC Treaty for a declaration that a decision communicated by letter of 17 July 1981, whereby the Council refused to pay the sum claimed in respect of refunds for the production of maize gritz intended for use in the brewing industry, is void, alternatively under Article 215 of the EEC Treaty against the Council and Commission lor damages in a like sum,

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

composed of: J. Mertens de Wilmars, President, U. Everling, President of Chamber, Lord Mackenzie Stuart, O. Due and Y. Galmot, Judges,

Advocate General: G. F. Mancini Registrar: J. A. Pompe, Deputy Registrar

gives the following:

JUDGMENT

previously granted to producers of maize incurred non-contractual liability and groats and meal and broken rice used for ordered it to pay to the parties brewing. concerned amounts equivalent to the production refunds which they would have been entitled to receive if, during the period from 1 August 1975 to 19 By its preliminary ruling of 19 October October 1977, the manufacture of maize 1977 in Joined Cases 124/76 and 20/77 gritz used in brewing had conferred an SA Moulins et Huileries de Pont-à- entitlement to the same refunds as the Moitsson v Office National Inter- manufacture of maize starch. professionnel des Céréales and Société Coopérative "Providence Agricole de la Champagne" v Office National Inter- professionnel des Céréales ([1977] ECR The applicant considers that, although 1795), the Court held that by abolishing the application of accession com- the refunds for maize gritz while pensatory amounts prevented it from retaining the refunds for the competing receiving production refunds for the product, maize starch, the Council had period from September 1975 to August committed a breach of the principle of 1977, from that date and until 19 equality of treatment, to the detriment of October 1977, it would have received the the producers of maize gritz. disputed refunds if the Council, by its above-mentioned Regulation No 665/75, had not illegally abolished the said refunds. The applicant therefore Following that judgment, the disputed submitted an application by a letter of 3 refunds were reintroduced by Council July 1981 registered at the Secretariat of Regulation (EEC) Nos 1125/78 and the Council on 6 July 1981, for the 1127/78 of 22 May 1978 (Official payment of those refunds which amount Journal 1978, L 142, p. 21 and p. 24) to the sum of UKL 32 874.65. with effect from the date of the judgment of the Court, namely 19 October 1977. By a letter dated 17 July 1981, signed by the Council's Legal Adviser and received by the applicant on 20 July 1981, that The fact that no refund was therefore application was rejected on the grounds granted for the period between 1 August that it was out of time and that the 1975 and 19 October 1977 has been applicant could not claim the relevant contested by the majority of the gritz payments because it had only producers concerned who brought commenced production after the actions before the Court founded on abolition of the refunds. Following the the non-contractual liability of the rejection of that application the applicant Community. In its judgments of 4 brought an action before the Court October 1979 in Joined Cases 241, 242, which was lodged at the Registry on 245 to 250/78, DGV, Deutsche Getrei- 21 September 1981. deverwertung und Rheinische Kraftfutter- werke GmbH and Others v Council and Commission of the European Communities and 64 and 113/76, 167 and 239/78, 27, 2. The written procedure followed the 28 and 45/79, P. Dumortier Frères SA normal course. However, the Council and Others v Commission of the European and the Commission, by letters of 6 and Communities, [1979] ECR 3091, the 1 July 1982, respectively, announced Court held that the Community had their intention not to lodge a rejoinder.

The applicant claims that the Court should: The Commission of the European Communities claims that the Court Declare that the decision of the Council should: communicated by letter of 17 July 1981 is void and that the Community must pay to the applicant the sum of UKL Dismiss the application as unfounded 32 874.65 together with interest; and order the applicant to pay the costs if the latter does not provide sufficient evidence that it was not able to and did In the alternative, order the Council or not pass on the loss of the refunds in the the Commission, or both, to pay to the prices charged to its customers and that applicant the same sum by way of the operations for which it is claiming damages, together with interest; damages would have qualified for the payment of production refunds and, in Order the defendants to pay the costs. particular, that the granules of maize gritz manufactured and delivered to the brewing industry were not larger than 2mm in size. The Council of the European Com- munities claims that the Court should:

In the absence of satisfactory evidence, Ill — Submissions and argu- to be furnished by the applicant, of the m e n t s of t h e p a r t i e s reality of the damage suffered and of the relation of cause and effect between the illegality of Regulations Nos 665 and 668/75 of the Council and of the 1. Admissibility relevant loss, to dismiss the application lodged by the applicant as unfounded; (a) The Council considers, in view of the judgments given on 27 January 1982 In that case, order the applicant to pay by the Court in Joined Cases 256, 257, the costs; 265 and 267/80, 5 and 51/81, Birra

Wiihrer and Others v Council and down in Articles 189 and 190 of the Commission of the European Communities Treaty and having binding force. and De Franceschi SpA Monfalcone v Council and Commission of the European The Council submits that the letter of 17 Communities ([1982] ECR 85 and 117) July 1981 addressed to the applicant by that the request submitted by the its jurisconsult docs not clearly come applicant by letter of 3 July 1981 and within the framework of Articles 189 and registered at the Secretariat of the 190 of the Treaty and does not comply Council on 6 July 1981 interrupted the with the procedural rules laid down by effect of the five-year limitation period those articles for the adoption of

Commission's officers for information purposes which communicated their On the other hand, the Council opinion on the subject of an agreement considers that the application is between private undertakings capable of inadmissible inasmuch as it seeks a falling under Article 85 of the Treaty declaration that the decision which and which was considered to be an according to the applicant is contained in element of fact and not a formal decision the letter of 17 July 1981 signed by the adopted by the Commission under Council's Legal Adviser by which Article 85 (3) of the Treaty.

adopted under the Act of Accession of According to the Council, Article 173 of 1972 concerning the application of the EEC Treaty restricts the Court's accession compensatory amounts. jurisdiction to review the legality of measures to those legal measures which On the other hand, the Commission, are intended to create or alter legal adopting the view of the Council, does relationships between natural or legal not consider that the application for a persons who are subject to the rules of declaration of nullity can be valid the Treaty, inasmuch as those measures inasmuch as it is directed against the comply with the procedural rules laid letter of 17 July 1981 signed by the

Council's Legal Adviser which cannot be above-mentioned judgment of the Court regarded as a decision within the of 19 October 1977 in Joined Cases meaning of Article 173 of the EEC 124/76 and 20/77, in which it was held Treaty in respect of which such a that the provisions of Article 11 of Regu- declaration could be of benefit to the lation No 120/67/EEC of the Council, applicant. as amended by Article 3 of Regulation (EEC) No 665/75 and the subsequent regulations which have replaced it were The Commission submits that the letter invalid inasmuch as they provided for concerned merely reproduces the opinion a difference of treatment, as regards held by the Council and the Commission production refunds, between maize at that time, which was presumed to groats and meal intended for use in the have already been communicated to the brewing industry and maize starch. applicant by the United Kingdom auth- orities, that claims for damages in respect of non-payment of production refunds In addition, in Joined Cases 64 and were time-barred after 20 March 1981. 113/76, 167 and 239/78, 27, 28 and 45/79, P. Dumortier Frères SA and Others v Council and Commission of the European Communities ([1979] ECR (c) The applicant maintains in a 3091), the Court held that producers in detailed argument, set out in its the position of the applicants were application, that its claim for damages is entitled to receive compensation from not time-barred, as suggested in the the Council in an amount equivalent to Council's letter of 17 July 1981, under the refunds on maize gritz used in the the provisions of Article 43/of the Statute brewing industry which those under- of the Court concerning the five-year takings would have been. entitled to limitation period for proceedings against receive if, during · the period from 1 the Community in matters arising from August 1975 to 19 October 1977, the use non-contractual liability. of maize for the production of gritz had conferred an entitlement to the same refunds as the use of maize for the In its reply, the applicant confines itself manufacture of starch. to stating that since the defendants concede that its application for damages under Article 215 of the EEC Treaty was The applicant states that it has manu- made within the prescribed period, it will factured maize gritz for the brewing make no comment on the defendants' industry since the turn of the century argument to the effect that the letter of and that it received production refunds 17 July 1981 signed by the Council's for the period from November 1974 to jurisconsult does not constitute a 31 July 1975. It submits that although, as decision within the meaning of Article already stated, for the period from 173 of the EEC Treaty. September 1975 to August 1977 the effect of the accession compensatory amounts was such that no production refunds were payable to the applicant in 2. Substance respect of that manufacture, such refunds would, in the ordinary course of events, have been payable to it from August 1977 until 18 October 1977 had (a) In its application the applicant it not been for the effect of Regulation submits that its action is founded on the No 665/76.

The Council adds that in the previous cases concerning liability to which In that respect, the Council notes that reference has been made (in particular in the Court has recently reaffirmed in the above-mentioned judgment of 4 paragraph 9 of the decisions in its above- October 1979 [1979] ECR 2955, mentioned judgments of 27 January 1982 paragraphs 14 to 17 of the decision), the that the right to compensation for Council had maintained that where a damage suffered depends on the satis- trader who considered that he had faction of a number of requirements suffered damage as a result of a relating to the existence of an unlawful Community measure passed on his loss measure adopted by the Community in his selling prices and therefore passed institutions, actual damage and a causal it on to a subsequent stage of the relationship between them. marketing chain, it was unfair to compensate that trader twice, the first time at the expense of the ultimate consumer and the second time from The Council considers therefore that the public funds, because that would lead to applicant still has to establish those last the unjustified enrichment of the trader two points. In the first place it must in question. show that it did not pass on or even that it was unable to pass on in its selling prices the difference resulting from the As regards the proof that the damage non-payment of refunds. If the applicant suffered had not been passed on in the had passed on the difference in its selling selling prices, the Council notes that prices it would not have suffered any real although the Court accepted the validity damage because the loss would have of such an argument, in the preceding been passed on to another stage in the quellmehl and gritz cases it considered marketing chain and ultimately to the that as neither side was able to furnish consumer. sufficient evidence, it was necessary to

give the benefit of the doubt to the for the loss of the production refunds, applicants. but maintains that the applicant still has to prove that the additional conditions for the payment of damages are fulfilled. The Council therefore asks the Court to reconsider that part of its case-law, especially because in the Council's The Commission submits in the first opinion in most cases the institutions are place that, as it has already stated in its unable to provide the Court with defence in Joined Cases 256/80, Birra convincing evidence in view of the fact Wührer and Others, no damages are that the only information which they payable to the applicant if the loss of the normally have at their disposal consists refunds was passed on in the prices of the admitted facts which the applicant charged to its customers. In that event, has chosen to provide in the written according to the Commission, the loss of procedure. The Council therefore the refunds was compensated by the requests the Court to instruct the increase in price and there was no applicant in the present case to prove damage. Accordingly, only if the that it has actually suffered damage. applicant can establish that, faced with competition from starch producers who had received refunds, it had been obliged to carry the loss itself so as not to lose Finally, in respect of the "green" rate to the market, is it entitled to compensation be applied for calculation of the equivalent to the refunds which should applicant's claim in national currency, have been paid. the Council submits that it follows from previous judgments of the Court and from considerations of the equality of treatment for all Community traders who In the second place, the Commission have suffered damage as a result of the maintains that the applicant must prove non-payment of the refunds concerned that the operations for which it is that the applicant's claim expressed in claiming compensation qualified for the units of account/European currency payment of the production refunds and units should be calculated on the basis of in particular that the granules of maize the quantity of the products used, in gritz manufactured and delivered to the national currency, by applying the brewing industry were not larger than "green" rate applicable at the time of the 2 mm in size. The Commission notes operation which conferred entitlement to that under Regulation No 2727/75 on the refund. the common organization of the market in cereals (Article 1 and Annex 4) production refunds are only payable on maize groats and meal falling within the In that respect, the Council notes that subheading 11.02 A of the Common the same question has already been Customs Tariff and that, in accordance referred to the Court in Joined Cases 64 with Additional Note 1 to Chapter 11 of and 113/73 and the succeeding cases the Common Customs Tariff, that tariff (Dumortier and Others v Council). subheading is limited to maize groats and meal which can pass through a sieve with 2 mm mesh.

In that respect, the Commission produces in the annex to its defence a As regards the burden of proof, the letter of 7 February 1980 sent by its applicant submits that, again for the Director General for Agriculture reasons given by Mr Advocate General addressed to the Permanent Secretary at Capotorti in Case 238/78, the burden of the Ministry of Agriculture of the United proof lies upon the defendant Kingdom in which the attention of the institutions, who must prove that the national authorities was drawn to the applicant passed on its loss to its erroneous nature of their practice in customers. If that is right, as the granting production refunds on groats institutions have produced no evidence larger than 2 mm in size. It also to that effect, the applicant considers produces the letter in reply dated 6 May that it is entitled, without giving any 1980 in which the national authority evidence itself, to have that question concerned disputes the grounds on which decided in its favour. The applicant then the Commission's interpretation is based asks the Court for a clear decision on and proposes the adoption of an that point, which would considerably amendment to Regulation No 2727/75 simplify the task of the Court and the in order to avoid any possible distortion parties in any future litigation involving in respect of the payment of refunds the same kind of problems. according to the dimensions of the product in question. The Commission observes that in December 1980 it introduced such a proposal, but that the Council has not yet taken a decision in However, the applicant states that the the matter. price received by it from breweries for its maize gritz has at all material times been fixed by market forces, not least among which has been competition or potential competition from manufacturers of (d) In its reply the applicant states, in starch and that there had been no response to the question, raised by the contract with their customers entitling Council and the Commission, whether it them to the benefit of the production had passed on the loss of the refunds to refunds. In order to justify these its customers and therefore had not itself contentions, the applicant provides suffered any damage, that, as was figures which in its view make it clear

According to the applicant, in a claim for damages the question is not, as the The applicant submits that whatever the Commission maintains, whether "the effect of those regulations they are quite operations for which the applicant is irrelevant to the present claim because claiming damages would have qualified this is not a claim under Regulation N o for payment of the production refund" 2727/75 but a claim for damages against under the legislation which has been held the defendant institutions for discrimi­ to be unlawful but whether they should nating against the applicant by not have qualified for such payment. For the granting it production refunds in respect reasons set out above, the applicant of its maize used for gritz for use in the submits that its operations did qualify for brewing industry at a time when those production refunds and that accordingly institutions were granting such refunds it is entitled, by way of damages, to a

PAULS AGRICULTURE v COUNCIL AND COMMISSION

Decision

1 By application lodged at the C o u r t Registry on 21 September 1981, Pauls Agriculture Limited b r o u g h t an action pursuant to the first paragraph of Article 173 of the E E C T r e a t y for a declaration that the decision of 17 July 1981, whereby the Council refused to pay it a sum of U K L 32 874.65 claimed in respect of refunds for the production of maize gritz intended for use in the brewing industry, was void. In the alternative, the applicant claims, pursuant to Article 178 and the second paragraph of Article 215 of the E E C T r e a t y , an identical sum by way of compensation for d a m a g e sustained as a result of the refusal to pay the above amount.

JUDGMENT OF 18. 5. 1983 — CASE 256/81

2 It should first be noted that in its judgment of 19 October 1977 in Joined Cases 124/76 and 20/77 (SA Moulins et Huileries de Pont-à-Mousson and Others, [1977] ECR 1795) the Court held that by abolishing the refunds for maize gritz, while retaining the refunds for a competing product, maize starch, the Council had committed a breach of the principle of equality of treatment, to the detriment of the producers of maize gritz.

3 Following that judgment, the disputed refunds were re-introduced by Council Regulations (EEC) Nos 1125/78 and 1127/78 of 22 May 1978 (Official Journal 1978, L 142, p. 21 and p. 24) with effect from the date of the judgment of the Court, namely 19 October 1977.

4 In its judgments of 4 October 1979 (Joined Cases 241, 242, 245 to 250/78, DGV-—Deutsche Getreideverwertung und Rheinische Kraßfutterwerke GmbH and Others [L979] ECR 3017, and Joined Cases 64 and 113/76, 167 and 239/78, 27, 28 and 45/79, P. Dumortier Frères SA and Others [1979] ECR 3091), the Court held that by abolishing the disputed refunds, the Community had incurred non-contractual liability.

T h e l i a b i l i t y of t h e C o m m u n i t y

7 The Court has already stated in its above-mentioned judgments of 4 October 1979, as well as in other similar cases, that the Community had incurred liability for abolishing the refunds for maize gritz under Regulation No 665/75 of the Council whilst retaining them for maize starch, in breach of the principle of equality of treatment for the various categories of producers concerned. For the same reasons, the Community has also incurred liability in respect of the applicant in this case.

The damage

8 Against the claim for damages calculated on the basis of the refund abolished for maize gritz during the period in question, the Council and the Commission, whilst not disputing that the Community has incurred liability, have raised the objection that the applicant was or should have been able to eliminate the damage by passing on the loss which resulted from the abolition of the refunds in its selling prices. They contend that it is for the applicant to prove the contrary.

9 The applicant, for its part, denies that it was possible to pass on the loss in that way. It maintains that, in the face of the competition of starch producers who were in receipt of the refunds, it was not in a position to pass on to its customers, in the selling prices of its products, the loss sustained as a result of the failure to pay the refunds.

JUDGMENT OF 18. 5. 1983 — CASE 256/81

n It follows that the loss for which the applicant must be compensated must be calculated on the basis that it is equivalent to the refunds which would have been paid to it if, during the period from 1 August to 19 October 1977, the use of maize for the manufacture of gritz used by the brewing industry conferred an entitlement to the same refunds as the use of maize for the manufacture of starch.

PAULS AGRICULTURE v COUNCIL AND COMMISSION

14 As regards the conversion by the defendant institutions of the amount of the damages into the applicant's national currency, the Court decided in its judgment of 19 May 1982 (Case 64/76, Ditmortier Frères and Others, [1982] ECR 1733) that the rate to be applied was that prevailing at the date of the judgment in which it was held that there was an obligation to make good the damage.

15 As regards the amount of the compensation claimed by the applicant, the latter has submitted to the Court a number of documents as proof of the quantities of gritz for which it claims to be entitled to compensation and of the amounts of the refunds not paid in respect of those quantities. The defendant institutions accept the accuracy of those documents only on condition that they be verified by the competent authorities. The Court is not in a position at this stage of the procedure to give a decision on the accuracy of these data. It is therefore necessary to lay down by interlocutory judgment the criteria whereby the Court considers that the applicant must be compensated, leaving the amounts of the compensation to be determined either by agreement between the parties or by the Court in the absence of such agreement.

As an interlocutory decision, hereby:

1. Orders the European Economic Community to pay to Pauls Agri- culture Limited the amounts equivalent to the production refunds on maize gritz used by the brewing industry which that undertaking would have received if, during the period from 1 August 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;

2. Orders that interest at the rate of 6% shall be paid on the above- mentioned amounts as from the date of this judgment, which is also the date to be taken into consideration for the conversion of those amounts into national currency;

3. Orders the parties to inform the Court within three months from the delivery of this judgment of the amounts of compensation arrived at by agreement;

4. Orders that in the absence of agreement the parties shall transmit to the Court within the same period a statement of their views with supporting figures;

5. Reserves the costs.