C-49/83

composed of: Lord Mackenzie Stuart, President, T. Koopmans and K. Bahlmann (Presidents of Chambers), P. Pescatore, A. O'Keefe, G. Bosco and O. Due, Judges,

Advocate General: M. Darmon Registrar: P. Heim

gives the following

LUXEMBOURG v COMMISSION

JUDGMENT

Facts and Issues

Regulation (EEC) No 816/70 of the "A table wine which has been the subject Council of 28 April 1970 laying down of a storage contract may not sub- additional provisions for the common sequently be recognized as a quality wine organization of the market in wine psr" (quality wine produced in á (Official Journal, English Special Edition specified region). 1970 (I), p. 234) provides in Article 5 et seq. that private-storage aid may be granted in respect of certain table wines. Until the entry into force of Regulation Anicie 5 (5) makes the granting of such No 2206/77, the relevant Luxembourg aid conditional upon the conclusion of legislation provided that any wines made storage, contracts. from grapes from recognized vine varieties could obtain the Marque Detailed rules for the conclusion of such nationale du vin luxembourgeois and storage contracts were laid down in hence be accepted as quality wines psr, Regulation (EEC) No 1437/70 of the provided that they satisfied certain Commission of 20 July 1970 (Official quality requirements. Wine that was not Journal, English Special Edition 1970 accepted when first tested and was (II), p. 469). The first subparagraph of classed as table wine could nevertheless Article 3 (1) of that regulation provides: be resubmitted to the Commission de la "Intervention agencies shall conclude Marque Nationale at a later date and contracts only for table wines." accepted as a quality wine psr if it had improved in the intervening period. That Commission Regulation (EEC) No provision was amended following the 2015/76 of 13 August 1976 (Official entry into force of Regulation No Journal 1976, L 221, p. 20) replaced 2206/77 so as to preclude table wines in Regulation No 1437/70. Council Regu- respect of which storage contracts had lation (EEC) No 1160/76 of 17 March been concluded from being submitted to 1976 (Official Journal 1976, L 135, p. 1) the Commission de la Marque Nationale made grape musts and concentrated at a later date and recognized as quality grape musts eligible for storage aid and, wines psr. in accordance therewith, the second paragraph of Article 1 of Regulation No 2015/76 enabled storage contracts to be By Decisions 83/38/EEC and 83/49/ concluded in respect of "table wines, EEC of 14 January 1983, the Com- grape musts and concentrated grape mission refused to charge to the musts". European Agricultural Guidance and

Upon hearing the report of the Judge- Ill — Submissions and argu- Rapporteur and the views of the m e n t s of t h e p a r t i e s Advocate General, the Court decided to open the oral procedure without any preliminary inquiry. However, it invited In the view of the Luxembourg the Luxembourg Government to send Government, the condition that storage any documents in its possession which contracts must not cover table wines would support its submissions to the which may subsequently be recognized Court. In a letter of 19 January 1984, the as quality wines psr, appears neither in Court was informed by the repres- the regulations applicable to the storage entative of the Luxembourg Government contracts in question, namely Regu- that the latter did not have any such lations Nos 1437/70 and 2015/76, nor in documents. the basic Regulation, No 816/70, Annex II of which defines "table wine" without making any reference whatsoever to the subsequent changes in the wine or its II — C o n c l u s i o n s of t h e p a r t i e s use.

The Luxembourg Government claims that In was only in Regulation No 2206/77 the Court should: that such a condition was laid down for the first time. Consequently, the Luxem- "Declare that the Commission of the bourg Government contends that it European Communities was wrong in cannot apply to storage contracts refusing to allow the Grand Duchy of concluded prior to the entry into force Luxembourg a sum of LFR 13 657 564 of that regulation.

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wine. The amount of wine made from grapes from Elbling and Riesling- Sylvaner (Rivaner) vines which was sold If it were possible to store a wine eligible as Marque nationale wine accounts for for the appellation "quality wine psr", only a small fraction of Luxembourg's such wine could enjoy a twofold total wine production. Therefore, the advantage, namely storage aid (as a table Luxembourg Government considers that, wine) and better marketing conditions if not all, at least some of the storage aid (as a quality wine). In the Commission's should be paid to it. view, such an outcome would conflict with the wording and the aims of the provisions relating to storage.

It regard a declaratory provision serving argues that the statistics annexed to the merely as clarification. application are inadequate in this regard .in view of the element of chance inherent in such data. It contends that that view is borne out by the intervention system provided for under the common organization of the In its reply, the Luxembourg Government market in wine. Whereas Regulation N o contests the Commission's assertion that 816/70, which was in force at the the conclusion of storage contracts in material time, laid down a system of respect of wines which were sub- price and intervention measures for table sequently recognized as quality wines psr wines, Regulation (EEC) N o 817/70 of is in conflict with the aims of the the Council of 28 April 1970 laying Community rules. down special provisions relating to quality wines produced in specified The Luxembourg Government contends regions (Official Journal, English Special that there is no doubt that the wines in Edition 1970 (I), p. 252) merely question were table wines at the time introduced a "policy of encouraging when the relevant storage contracts were quality production" for wines and provided for no measure of economic concluded, and, therefore, qualified for support, such as storage aid. all the advantages available under the EAGGF for table wines from the other

Community countries. During the table wine. The fact that no more exact storage period, the wines were kept off evidence can be adduced other than the the market, which helped to stabilize statistics annexed to the application is prices. Thus the aim pursued by the due to the inadequacy of Community Community rules was attained. recording and accounting requirements, no blame for which attaches to either the Luxembourg wine-growers or the Luxem- bourg authorities. The Luxembourg Government argues that there is no justification for the Commission's view that a wine stored The Luxembourg Government considers under a contract financed by the that, since it is the Commission that has EAGGF is bound always to remain refused in a generalized manner and simply table wine, even when its intrinsic without giving any further particulars to qualities have improved to the extent that recognize that a number of storage it has become a quality wine. The contracts were in order, it is for the solution advocated by the Commission Commission to specify how much wine has the effect of significantly restricting has in fact become quality wine psr. the amount of Luxembourg Moselle Moreover, the Luxembourg Government wine qualifying for a storage contract offers, under Article 41 (1) of the Rules and of encouraging producers to dispose of Procedure, to produce evidence and of their wine immediately on an already establish by experts' reports or, in the saturated market. alternative, by oral testimony or any other proper means, how much of the table wine stored was actually marketed

wine-growers of Luxembourg. The that that would conflict with the spirit Commission's complaint against them is and objectives of the Community rules. directed against action that was subject In the Commission's view, a table wine to no clear prohibition. In the Luxem- remains table wine for its whole bourg Government's contention, legis- existence through to the marketing stage. lative provisions ought to be interpreted In contrast, a wine which is granted the on the basis of the texts themselves and Marque nationale, provided for in the not on the basis of the policy that the relevant Luxembourg legislation, has legislature may have wished to pursue. never been a table wine and must not have been the subject of intervention measures intended for table wines.

LUXEMBOURG v COMMISSION

erect, as the Luxembourg Government Luxembourg Government to furnish the contends, any kind of barrier causing the necessary evidence that its alternative wine concerned for ever to remain claim is well founded. simply table wine. The only wine for which a producer can conclude a storage Since the Community financing of contract is table wine. Once storage certain transactions is conditional on contracts have been concluded for their being in conformity with Com- particular wine, that wine is no longer munity rules, the Commission considers eligible to obtain the Marque nationale, that a Member State applying for such not because storage contracts were finance may not merely make un- concluded, but because of the intrinsic substantiated declarations that the character of the wine. transactions have been duly carried out.

As for the application for partial IV — Oral p r o c e d u r e clearance, the Commission points out that, by virtue of Regulation (EEC) No 1153/75 of the Commission prescribing The Luxembourg Government, re- the form of the accompanying presented by N. Schaeffer, and the documents for wine products and Commission of the European Commun- specifying the obligations of wine ities, represented by C. Berardis- producers and traders other than Kayser, a member of its legal retailers (Official Journal 1975, L 113, department, assisted by Mr Reichart, as p. 1), Member States have appropriate expert, presented oral argument at the instruments for the purpose of sitting on 13 March 1984. monitoring the destination of the wine they produce. In the Commission's view, The Advocate General delivered his those instruments should enable the opinion at the sitting on 12 April 1984.

JUDGMENT OF 12. 7. 1984 — CASE 49/83

Decision

1 By application lodged at the Court Registry on 28 March 1983, the Grand Duchy of Luxembourg brought an action, under Article 173 of the EEC Treaty, for a declaration that Commission Decisions Nos 83/38 and 83/49 of 14 January 1983 (Official Journal 1983, L 38, p. 32 and L 40, p. 57, respectively), by which the Commission refused to charge to the EAGGF Guarantee Section certain expenditure incurred by the Grand Duchy in the 1976 and 1977 financial years in respect of private-storage aid for table wines, are void.

2 The reasons given to the Grand Duchy by the Commission for its refusal are based, in so far as this case is concerned, on the fact that, under the Luxem- bourg provisions in force at the material time and contrary to the Community rules on the matter, wine stored as table wine could sub- sequently obtain the Luxembourg Marque nationale and hence be sold as quality wine produced in a specified region (quality wine psr).

6 The first subparagraph of Article 3 (1) of Regulation (EEC) No 1437/70 of the Commission of 20 July 1970 (Official Journal, English Special Edition 1970 (II), p. 469) provides: "Intervention agencies shall conclude contracts only for table wines". Regulation N o 1437/70 was replaced by Commission Regulation (EEC) N o 2015/76 of 13 August 1976 (Official Journal 1976, L 221, p. 20); the second paragraph of Article 1 of that Regulation provided that storage contracts could be concluded in respect of "table wines, grape musts and concentrated grape musts".

? Commission Regulation (EEC) No 2206/77 of 5 October 1977 (Official Journal 1977, L 255, p. 13) inserted in Regulation N o 2015/76 the following Article 6 (7) :

"A table wine which has been the subject of a storage contract may not subsequently be recognized as a quality wine psr."

s The Luxembourg Government emphasizes that both the basic Regulation No 816/70 and the implementing Regulations Nos 1437/70 and 2015/76 merely stipulate that storage contracts are to be concluded only for table wine; they are silent as to the subsequent changes in the wine and its use.

9 It follows, in the contention of the Luxembourg Government, that for it to be possible to regard a storage contract as meeting the necessary conditions and hence as eligible for storage aid, it was sufficient, before the entry into force of Regulation N o 2206/77, that the wine was table wine at the time when the contract was concluded. Since the Commission does not dispute that the whole of the wine stored in Luxembourg in the 1976 and 1977 financial years actually was table wine when the storage contracts were concluded, it may not refuse to charge the payment of the aid in question to the EAGGF.

u In order to resolve this problem of interpretation, it is necessary first to eliminate the arguments that the Commission seeks to derive from Regu- lation No 2206/77. That regulation does not apply to the contracts at issue, since they were concluded prior to its entry into force, and the statements inserted by the Commission in the preamble to that regulation cannot be relied on as against the Member State concerned.

is Accordingly, it should be examined whether, as the Commission claims, the conclusion of storage contracts in respect of wines which, under Luxem-

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bourg legislation, could subsequently become quality wines psr should be regarded as conflicting with the common organization of the market in wine, even in the absence of an express provision to that effect.

i6 It is clear from the text of the abovementioned Community provisions that only table wines and, following the entry into force of Council Regulation No 1160/76 of 17 March 1976 (Official Journal 1976, L 135, p. 1), grape musts and concentrated grape musts are eligible for storage aid.

i7 In contrast, although quality wines also fall within the scope of Regulation No 816/70, they are excluded from Title I thereof, relating to prices and intervention. The Community legislature therefore did not consider that it was necessary, in order to stabilize the market and ensure a fair standard of living for the agricultural community concerned, to provide for intervention measures for quality wines. It considered that it was enough to foster a policy of encouraging quality by means of the specific measures in Regu- lation No 817/70 in order to contribute to the improvement of conditions on the market and, as a result, to an increase in outlets as is stated in the second recital in the preamble to the regulation.

21 The interpretation of the Community rules suggested by the Luxembourg Government should, therefore, be rejected and the view, rightly taken by the Commission, should be confirmed, namely that quality wines psr, whatever the time at which that appellation was conferred on them under the relevant national legislation, are not eligible for the storage aid provided for under Regulation No 816/70.

22 Since it is not contested that at least some of the table wine which was stored in Luxembourg in the 1976 and 1977 financial years subsequently obtained the Marque nationale and was disposed of as quality wine psr, the Luxem- bourg Government's principal claim, namely for recognition of its entitlement to clearance of all the expenses connected with the payment of the storage aid at issue in this case, must be rejected.

T h e alternative claim

23 In the event that its principal claim is rejected, the Luxembourg Government requests that its entitlement to clearance should be recognized at least as regards the expenses connected with the payment of the storage aid disbursed in respect of the quantities of table wine which were never recognized as quality wine psr.

24 It should be acknowledged, first, that, contrary to the view taken by the Commission, before Regulation No 2206/77 entered into force, it was possible for the Luxembourg authorities to conclude storage contracts in good faith in respect of wines which, at the time the contracts were concluded, were in fact table wines and were never recognized as quality wines psr even though the possibility existed under the relevant national legislation.

29 The Commission contends that it is for the Member State which is asking the Commission to charge expenditure to the EAGGF to prove that the expenditure was incurred in conformity with the Community rules. In that respect it contests the probative value of the statistics produced by the Luxem- bourg Government.

30 It is true that, in order to obtain EAGGF financing for the storage aid in question, the Luxembourg Government had to demonstrate, not only that the wine stored was actually table wine at the time when the storage contracts were concluded, but also that it was never recognized as quality wine psr. However, in view of the particular circumstances, the question must be asked whether the Luxembourg Government has not satisfied that evidential requirement.

3i It should be observed that although, by submitting the aforementioned statistics to the Court, the Luxembourg Government has not shown precisely what quantities of the stored wine were disposed of as table wine, it has nevertheless shown that a quantity equivalent to at least one-third of that wine was not marketed as quality wine psr.

JUDGMENT OF 12. 7. 1984 — CASE 49/83

32 In those circumstances, the Luxembourg Government should be held to be entitled to have the Commission charge to the EAGGF part of the sums that were paid as storage aid for table wine in the 1976 and 1977 financial years; in the absence of more precise data, that amount should be fixed at one-third of the sums claimed.

33 From all the foregoing considerations it follows that Commission Decisions 83/38/EEC and 83/49/EEC of 14 January 1983 must be declared void in so far as they refuse to charge to the EAGGF Guarantee Section one-third of the expenditure incurred by the Grand Duchy of Luxembourg in the 1976 and 1977 financial years in respect of storage aid for table wine.

hereby:

1. Declares Commission Decisions 83/38/EEC and 83/49/EEC of 14 January 1983 void in so far as they refuse to charge to the European Agricultural Guidance and Guarantee Fund, Guarantee Section, one- third of the expenditure incurred by the Grand Duchy of Luxem-

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bourg in the 1976 and 1977 financial years in respect of private- storage aid for table wines;

2. Orders the parties to bear their own costs.

M a c k e n z i e Stuart Koopmans Bahlmann Pescatore O'Keeffe Bosco Due