C-325/85

IRELAND v COMMISSION

OPINION OF M R ADVOCATE GENERAL DA C R U Z VILAÇA delivered o n 16 September 1 9 8 7 *

Mr President, I — Legislative background and history of Members of the Court, the dispute

1. We have before us for consideration 3. The basic rules concerning the financing today the applications lodged by six of the common agricultural policy were laid Member States — the Kingdom of down in Regulation No 729/70 of the Denmark, the Federal Republic of Council of 21 April 1970.' It provides that Germany, the French Republic, Ireland, the the common agricultural policy is to be Kingdom of the Netherlands and the United financed by the European Agricultural Kingdom — seeking the annulment of eight Guidance and Guarantee Fund as part of decisions of the Commission concerning the the Community budget (Article 1 (1)), the clearance of the accounts of the European Guarantee Section being responsible for financing 'refunds on exports to third Agricultural Guidance and Guarantee Fund countries' and 'intervention intended to ('the EAGGF'), Guarantee Section, for the stabilize the agricultural markets' (Article 1 financial years 1981 (six decisions dated 28 (2)), provided that the refunds were granted August 1985) and 1982 (two decisions dated and the intervention undertaken 'in 1 July 1986), inasmuch as the decisions accordance with the Community rules refused to charge to the EAGGF some of within the framework of the common the funds paid by the Member States to organization of agricultural markets' various traders by way of intervention (Articles 2 (1) and 3 (1)). and/or export refunds for fish which the Commission regards as having been caught in excess of the authorized quotas.

of the market in fishery products and the 10. Regulation No 101/76 established for second a common structural policy for the its part, as did its predecessor (Regulation fishing industry. No 2141/70), the rule that there must be equal conditions of access to and use of Community fishing grounds, based on the principle of non-discrimination and in 6. The regulations contained a scheme accordance with the particular aims of based on the same principles as the p economic integration and the establishment revious regulations, adapted to meet the of the common market. The concern to requirements of politicial and economic avoid over-fishing was, however, already developments in the Community already evident in Article 4, which provided that the reflected in the derogations permitted by Council could adopt 'the necessary conser­ Articles 100 and 103 of the Act of vation measures' and on the basis of which Accession. the Commission submitted the proposals for conservation measures which lie at the origin of these applications. 7. The purpose of Regulation No 100/76 was essentially to fix fishing prices for the Community and žo establish a single market 11. It is in particular in connection with the based on uniform prices, created by fixing competence of the Commission to adopt annually an official withdrawal price, or those measures that the disputes before us minimum guaranteed price, for each today arose. category of fish. 12. As was laid down in Article 102 of the 1972 Act of Accession and definitively 8. It was stated in the preamble to the regu­ confirmed by the Court in its judgments,5 lation that the expenditure incurred by the the power to determine fishing conditions Member States as a result of the obligations with a view to protecting fishing grounds arising out of the application of the regu­ and conserving the biological resources of lation was to be borne by the Community in the sea passed to the Community exclusively accordance with Articles 2 and 3 of Regu­ on 1 January 1979 (on the expiry of the lation No 729/70. transitional period), and is now to be exercised by the Council, acting on a proposal of the Commission, as laid down in Article 102 of the Act of Accession and 9. Regulation No 100/76 was still in force Article 43 of the Treaty. in 1981 but was repealed and replaced with effect from 1 June 1982 by Council Regu­ lation No 3796/81 of 29 December 1981 on the common organization of the market in 13. It was not until 1983, however, that the fishery products, 4 in which there appeared Council reached agreement on a s et of a provision (in Article 26 (2)) which was Community rules for the conservation and not included in Regulation No 100/76. management of fish stocks, in spite of the According to Article 26 (2) financing of fact that as early as October 1976 intervention measures was to be restricted to (following the widening of fishing zones to the quantities or quotas of fish allocated to 200 miles at the third Conference on the each Member State, out of the total volume Law of the Sea) the Commission had of allowable catches (TACs). 5 — Judgment of 5 May 1981 in Case 804/79 Commission v United Kingdom [1981] ECR 1045, at p. 1072, paragraph 4 — Official Journal, L 379, 31.12.1981, p. 1. 17.

15. In general terms, the measures fell into 18 Although the Council adopted at its two groups: meeting in December 1980 a d declaration (which cannot have binding legal effect) to the effect that the Member States would (i) on the one hand, the Council decided conduct their fishing activities in such a way that the Member States must conduct as to take into account the total allowable their fishing activities in such a way as catches (TACs) for 1981 mentioned in the to take into account the TACs contained proposals submitted by the Commission in in particular in the Commission's November and December 1980, it never proposals, and the part of the TACs approved the proposals despite the fact that made available to third countries under the Commission modified them and international agreements or presented them in a final version on 24 July conventions; 1981 (to take effect from 1 January). The Commission's proposals included rules for fixing the TACs for 1981 and the share available to the Community, taking into (ii) on the other hand, it provided in account international obligations assumed principle that the measures concerning by it, on conditions for fishing and on the the conservation and surveillance of fish allocation amongst the Member States in stocks in existence on 3 November 1976 1981 of the total allowable catches. should continue to apply, permitting them to be modified only in accordance with the procedures and criteria referred to in Annex IV to the 'Hague 19 In view of the difficulties resulting from Resolution' adopted on that date. the absence of agreement within the Council, the Commission submitted to it at its meeting on 27 July 1981 a declaration in which, referring to the case-law of the 16. Annex VI to the Hague Resolution Court of Justice, it pointed out that it had stated that as long as Community measures certain rights and duties under Article 155 concerning the conservation of resources of the Treaty and, invoking the overriding public interest, it called upon the Member 6 — Official Journal, L 298, 7.11.1980, p. 38. States to abide by the terms of its proposals

and stated that in view of the circumstances 23. In 1982 the situation was somewhat it considered those proposals to be legally different. binding. The declaration drew immediate objections from the Council's Legal Department and from some of the Member 24. In that year, as previously, the Council States, and subsequently was the subject of failed to approve in time the Commission's questioning and criticism in the European proposals (submitted on 17 and 21 June of Parliament.7 that year), as a result of which the latter issued a declaration at the Council meeting of 21 July 1982 similar to that of 1981 20. Nevertheless, the Commission reiterated though couched in less peremptory terms. its view in letters dated 28 July, announcing at the same time to the Member States that pending the next Council meeting it 25. However, since final agreement proved intended to approve catches which difficult to achieve, the Council approved amounted to not more than three-quarters the application of provisional measures for of the quotas proposed by it, and calling on periods which, taken together, covered the the Member States to indicate what whole year. The measures resulted in the measures they proposed to take in order to application of the following scheme: until ensure that that rule was observed. 23 July the Member States were obliged to take into account the TACs proposed by the Commission on 24 July 1981, and from 24 July to 31 December they were to take into 21. In the case of one of the Member States account the proposals of 21 June 1982. (Ireland) the Commission further emphasized its views in a letter of 29 July with regard to herring fishing, stating that it would not approve fishing in excess of 26. In addition, on 25 January 1983, the two-thirds of the quotas proposed by it and Council approved Regulation No 170/83 urging that Member State to adopt appro- establishing a Community system for the priate measures to ensure that that limit was conservation and management of fishery respected. resources,8 pursuant to which was adopted Council Regulation No 172/83, of the same date, 9 which fixed retroactively the TACs for 1982, the share of those catches 22. Ireland immediately challenged the available to the Community, the way in assertion that the Commission's proposals which it was to be allocated between the had binding force (and refused to accept Member States and the relevant conditions that the quotas were compatible with the for fishing. Hague Resolution), as did all the other applicants when, as early as 1984, during the procedure for clearing the accounts for 1980/81, the Commission informed them 27. Those are the circumstances in which that expenditure incurred for intervention or the Commission refused, when clearing the export refunds relating to fish caught in EAGGF accounts for the 1981 and 1982 excess of the quotas fixed by the financial years, to finance intervention Commission would not, in principle, be measures and export refunds in the fishing financed by the Community. sector granted in relation to fish which it

1. The Commission's lack of powers 32. However, it does throw some light on the extent to which Article 155 may be 28. The submission that the Commission relied upon to justify an act of the had no power to regard its proposals as Commission. legally binding, and therefore to draw legal consequences from Member States' failure to observe them, is put forward by Ireland, 33. As the Court clearly emphasized in France, the United Kingdom and Denmark, paragraph 6 of,the decision, the third indent although each from a different standpoint of Article 155 merely provides 'in terms and with different arguments. which are almost identical to those used in Article 145 to describe the same function of 29. An examination of that submission is the Council, that the Commission is to have crucial to a settlement of the dispute. In its own power of decision in the manner order to make it I shall give a brief review provided for in the Treaty'.11 which will take us directly from the question of the ambit of the own power of decision conferred on the Commission, in 'normal' 34. Thus the third indent of Article circumstances, by Article 155 of the Treaty 155 — like Article 145 — does not confer a to the existence, extent and limits of the general or unlimited power, so that Commission's powers of intervention in everything must depend on the extent of the 'exceptional' circumstances when the powers attributed to the institution by Council fails to act. specific provisions in the Treaty (for example, Article 13 (2), Article 33 (4) and 30. (1) One of the applicants — Ireland — (7), Article 90 (2) — which was concerned begins by calling attention to the fact that in the case just cited — and Article 97) and the vital function attributed to the it is not possible for it to arrogate to itself Commission by Article 155 of the Treaty generally powers conferred on the other does not authorize it to go beyond the institutions. bounds laid down in that article, in particular to convert its own proposals on matters within the Council's sphere of 35. It follows that, as Article 43 of the competence into binding rules. That is Treaty and Article 102 of the 1972 Act of borne out by the existence of the parallel Accession indicate, the power to define the provision in Article 145 of the Treaty conditions for fishing and to adopt measures defining the powers of the Council, and was for conserving the biological resources of recognized by the Court in its judgment of the sea — which since the end of the transi- 6 July 1982 in Joined Cases 188 to 190/80 tional period belongs exclusively to the France, Italy and the United Kingdom v Community 1 2 — must be exercised by the Commission.I0 11 — The emphasis is mine. 10 — [1982] ECR 2545, it p. 2573, paragraph 6. 12 — See supra, paragraph 12, and infra, paragraphs 42 and 43.

40. The various speakers at the hearing 36. The United Kingdom claims that only presented the main arguments of the parties, the Council has the power to give, if so that I need not reproduce them here. necessary—as it did in previous years by means of a number of provisional decisions — imperative effect to the Commission's proposals; it did not do so in 41. Consequently, I shall now give my 1981, however, and to concede that the opinion on that critical aspect of the cases Commission could, de motu proprio, give before us. binding effect to its proposals is to create a dangerous precedent as regards the equi- librium of the Community institutions. 42. As we have seen, it is common ground that by virtue of Article 102 of the 1972 Act of Accession power to adopt, in the context of the common fisheries policy, measures 37. Whilst that is in fact the typical pattern for conserving maritime resources was of the distribution of powers laid down by transferred with effect from 1 January 1979 the Treaty, reliance upon it is not sufficient 'fully and definitively to the Community'5 to answer the question as to how to resolve and must now be exercised by the Council borderline cases such as the one before us in accordance with that article and Article appears to be. It may be asked whether, if 43 of the EEC Treaty. the Council fails to exercise the powers attributed to it, another institution or a Member State may or should take its place, and under what conditions. 43. It is also not contested that in those circumstances the Commission's failure to act cannot 'in any case restore to the Member States the power and freedom to 38. More particularly, it may be asked act unilaterally in this field'.13 whether in this case the Commission's powers, which are limited in principle to submitting proposals, may extend — and on 44. Could the Commission do so? And what conditions — to the adoption of under what conditions? compulsory measures, if the Council fails to act, under the principle of continuity in the Community system and by virtue of its mission as custodian of the Treaties, which 45. It may be said that it is now settled by it is recognized as having, in the opening the Court that the Commission and the words of Article 155, in order to guarantee Member States enjoy a power to act the functioning and development of the (including the power of decision)in the form common market. of an obligation which assists them in the event of failure to act by the Council,

53. I believe that the general principle to be 49. Nevertheless, I consider that the deduced from the judgment of 5 May 1981 judgment of 5 May 1981 to which I have is that, in keeping with the Council's referred provides us with the essential provisional decisions and the spirit of the general guidelines on the basis of which a 1976 Hague Resolution, intervention by the suitable division of powers may be agreed Commission and the Member States when upon in these circumstances and on the the Council fails to act must be based on a basis of which the conditions governing, process of consultation or cooperation, and the limits on, the Commission's powers involving both parties (paragraphs 28 and of intervention may be defined. 32).

55. In such circumstances the Court to undertake detailed consultations with the emphasized the importance of a 'procedure Commission and to seek its approval in for cooperation between the Member States good faith, but also a duty not to lay down and the Commission'. national conservation measures in spite of objections, reservations or conditions which might be formulated by the Commission' (paragraph 31). 56. Arid, although it acknowledged that the provisional decisions reflected the Council's intention of reinforcing 'the authority of the Commission's proposals' (paragraph 25), it 60. Having regard to the Observance of the regarded them as no more than 'the point of essential balances intended by the Treaty', I departure for concerted Community action' do not see any justification for abandoning (paragraph 28). that model where, as in the cases before us, the Council remains inactive to the point of failing to adopt even provisional measures 57. In other words, even where the conferring on the Commission the same Commission is 'covered' by a provisional important role as was conferred on it by Council decision in which — directly or by decisions approved previously. means of a reference to the Hague Resolution — an important role is attributed to the Commission, the Court did not attribute to it, as was logical, an 61. Nothing more seems to be required by autonomous and binding power of decision, the condition that 'the Community . . . retain nor even the power to intervene unilaterally; in all circumstances its capacity to comply it thus did not concede that the with its responsibilities' (paragraph 23), nor Commission's proposals had the character does anything else appear to be implied by of 'independent sources of legal obli- the obligations to act or to refrain from gations', in the words of the British acting imposed on the Member States by Government. Article 5 of the Treaty.

priate conservation measures, always of proposed by Member States is not the same limited range and never overriding the as saying that its proposals are, purely and objections which the Commission may raise simply, compulsory per se: in the first case against such measures. the national measures form the basis of the Commission's opinion, whereas in the second their contribution is left out of the account. It may be that ultimately there is, or there may be achieved, a concordance of 64. I consider, however, that even if one views, but in the interests of 'good adminis- accepts the not unreasonable proposition tration' a dialogue is dispensed with which that the Member States have special obli- might enable that concordance to be gations to act if the Council fails to do so, revealed or positions to be reviewed in the in view of the responsibilities imposed on light of the various suggestions which may them by Article 5 of the Treaty, nothing be made, which is a more solid foundation indicates that they must do so precisely in on which to anchor Community measures. accordance with the tenor of the Commission's proposals.

68. I see no reason to alter that view in the 65. Once the transitional period laid down ingenious way in which the Commission by Article 102 of the Act of Accession had explained its position, considering the expired, their obligations to act became even quotas it proposed as being a maximum less specific than before and could not be which the Member States could not exceed. fulfilled on terms other than those on which Even in that case, the result is the same : the the Commission was bound, to fulfil its Commission unilaterally decided that its own — in other words, in the context of proposals were to be imperative and legally consultations in which the Commission was binding. to have the final say.

70. The Commission's proposals were Regina v Tymen,16 in which the Court indeed the subject of lengthy discussion in stated that Member States could not the Council. consider that unilateral measures adopted by them in the absence of action by the Council were approved merely by virtue of 71. However, there is no evidence — and the fact that they were identical in content none has emerged during the to the proposals submitted by the proceedings — that enables us to conclude Commission to the Council with a view to without a shadow of a doubt that the taking concerted action at Community level. Commission's proposals were the subject of consultations with the Member States in question conducted in accordance with the 75. That interference with the balance of requirements which may be elicited from the power between the institutions does not, case-law of the Court of Justice, that is, then, appear to be lawful. 'detailed' consultations conducted 'in good faith' and — in keeping with the requirement of transparency which is vital in 76. A supplementary consideration of this field — designed to achieve its aims, theory enables me to reinforce that which means to achieve the joint adoption conclusion. of measures to overcome the difficulties presented by the Council's failure to act. 77. In order to define the limits of the Commission's power to act when there is a 72. It should not be forgotten that the legal vacuum as a result of the Council's Council's inability to reach an agreement failure to act, legal theorists have used two was finally established at the meeting on 27 different bodies of theory: the 'standstill July 1981, and that only from that date did theory' and the 'theory of special powers' or the Commission declare that it would draw of 'exceptional circumstances'. from that fact the consequences which form the subject-matter of these actions. Until then the discussions were directed towards 78. The first recognizes that the the approval of conservatory measures by Commission has the power to extend the the Council; afterwards, the Commission's validity of measures which have expired, proposals were not used as the basis of a maintaining the old rules for as long as the fresh set of consultations, which ought to Council has neither renewed nor altered have been undertaken, in the proper them formally. That practice has frequently manner, in order to deal with the new been resorted to in the Community, situation created by the Council's definitive particularly in the context of the common failure to act. agricultural policy; the Court itself has recognized the practice as valid and it has the advantage of not departing materially 73. In the circumstances, what remained from the rules created by the competent was solely the Commission's view of what legislative organ. measures were needed to conserve fish stocks, which took the form of the quotas it proposed. 79. According to the second, in a serious crisis where, measures are urgently required, the Commission may be invested with 74. Now, the Court has definitively ruled 'legislative' powers to deal with the crisis, that the Commission's proposals cannot in themselves constitute binding rules in 16 — Case 269/80, op. cit., paragraphs 10 and 11.

creating new rules when the old prove to be pursue the consultation procedure which the already inadequate to meet the requirements Court regarded as the correct path to the of the situation. That view is basically what establishment of conservation measures is reflected in the approach adopted by the when the Council failed to act, but in Commission in its declaration of 27 July addition the adoption of such an approach 1981. The theory of special powers is, it would in fact be the solution which would appears, recognized in the constitutional best correspond to the extension by the law or the jurisprudence of various Member Commission of the Council's provisional States (Denmark, Italy, France, Germany), rules which expired in December 1980, but its postulation was always based on the without having to retain exactly the existing assumption that the circumstances were or proposed measures. The dialogue would extremely grave, as in the case of war, for enable them to be adapted to the circum- instance. In such circumstances the Head of stances and would comply with the prin- State, the Government or the administration ciples governing the balance of powers may adopt measures having a legislative among the institutions. Extending the character, originally within the Parliament's validity of the previous rules (at least in power, to be ratified by the latter as soon as spirit, extending the terms to include fixing possible. national quotas in accordance with the proposed TACs) would, moreover, be the normal corollary of the principle, of continuity in the Community which the 80. I do not think that the situation we are Court regarded as the basis for suppletive concerned with can be assimilated to that action by the Commission. type of case. The political impasse in the Council, although persistent, could not be regarded as a profound crisis jeopardizing the continued existence or the functioning of the Community to such an extent that, 84. The Council's provisional decisions faced with an insurmountable paralysis of (and the declaration recorded in the minutes the competent institution as a result of force of the meeting of 15-17 December 1980) majeure, the 'executive' was entitled to speak of 'taking into account' the TACs arrogate to itself legislative powers. proposed by the Commission, without saying that they are binding if the Council has never approved them. There is no indi- cation that a unilateral attempt by the 81. It could perhaps be argued that over- Commission to resolve the difficulty must be fishing was so serious that the Commission accepted if it consists in applying the was entitled to exercise special powers to proposed restrictions in anticipation as if resolve the crisis as in the case of a constitu- they had been approved, taking advantage tional emergency. of the Council's failure to act in order to make the proposed TACs and quotas binding.

86. O n the basis of the foregoing consider- 90. The applicants are more or less ations I conclude that the first submission in unanimous in maintaining that in 1981 there the application must be upheld and that was no established link between compliance consequently the decisions at issue with the TACs and the fishing quotas and concerning the clearance of the accounts for Community financing, making the latter 1981 must be declared void on the ground dependent on the former. that there were no binding rules fixing the TACs and quotas which were breached by the applicant Member States. 91. In general terms, they draw attention to the fact that at that time no rule existed which expressly established such a 2. The financial consequences of breaching the dependency and which thus provided justifi- rules at issue; the principle of legal certainty cation in law for refusing Community finance on the basis that the fish had been caught in excess of the fixed quotas.

87. The conclusion I have reached concerning the submission which I have just 92. No such relationship is to be found examined — that the Commission was not either in Regulation N o 100/76, estab- entitled to regard its proposals as binding in lishing the common organization of the the circumstances in which it did, having market in fishery products, or in Regulation omitted the necessary consultation N o 101/76, on structural policy in the procedure with the Member States required fisheries sector. Neither of them (as Ireland by the balance of powers instituted by the pointed out) provides, moreover, for TACs Treaty — is sufficient to resolve the second or catch quotas, or for any other restrictions important question raised by the applicants. on the quantities of fish which could be caught by each Member State.

instructive, in this context, to compare the refunds in the fisheries sector, made antepenultimate recital in the preamble to payment of them subject merely to proof that regulation with the corresponding that the products were of Community origin recital in Regulation N o 100/76, the and were exported outside the Community. difference in the wording of which reveals the fact that it was new to the Community financing of fishing activities. 99. The Danish Government considers that if those conditions are fulfilled the trader is entitled to require payment by the national 95. The Netherlands argues that the express authorities of the refunds and the auth- adoption of the provision in Article 26 (2) orities have no option but to pay the merely emphasizes the absence of such a relevant amount. rule prior to 1 June 1982, meaning that before that date intervention measures in the fisheries sector were unconditionally 100. Since there is no corresponding eligible for Community financing. provision in any Community legislation the Member States cannot impose the supplementary condition for payment of the refunds that proof be given that the quan- 96. In addition, the Netherlands tities to which they relate were caught Government and others pointed out that within the quotas. Consequently, such a Article 26 (2) itself is restricted to inter- condition when imposed by the Commission vention measures; neither it nor Article 25 in connection with Community financing contains any restriction concerning the must be unlawful. eligibility for financing of export refunds, the difference between the two systems (introduced only after 1981) being explained, according to those Member 101. The Danish Government points out States, by the fact that exported that the Commission's view leads to an fish — which the exporter may acquire absurd result: on the one hand, the Member anywhere on the European market — does States are obliged to pay refunds without not influence the Community market. requiring proof that the fish to which they relate were caught within the quotas, whereas on the other hand in connection with the clearing of the accounts they may 97. In the case of export refunds find that the Commission will refuse to Commission Regulation No 2730/79 of 29 finance wholly or in part refunds which November 1979, which lays down common have already been paid. detailed rules for the application of the system of export refunds on agricultural products, 1 7 likewise makes no mention of compliance with the quotas as a condition 102. As was pointed out by the Federal for eligibility for financing. Republic of Germany, the imposition of such a condition amounts, moreover, to introducing a means of control not provided for in any regulations, contrary to what has 98. Article 7 (1) of Regulation N o 110/76 been the case in other common market of 19 January 1976, which, as we know, organizations such as that governing the laid down general rules for granting export sugar market, in which quota schemes and the issuing of import and export certificates 17 — Official Journal, L 317, 12.12.1979, p. 1. were provided for.

105. T o sum up: the applicants consider that in the absence of an express provision 109. The measures restricting fishing by prohibiting export refunds for fish caught means of catch quotas are designed to outside the quotas, it is not possible to conserve and manage fish stocks, and thus speak of an infringement of Community have nothing to do with regulating the rules because the Member States could not market and financing the relevant policies, refuse to pay them. and there is no relationship, in the absence of an express provision to that effect (which never came into being as regards export refunds) between the quota system 106. Admittedly, there are the provisions in introduced by the Commission in 1981 and Articles 2 (1) and 3 (1) of Regulation N o the financing of the common market organ- 729/70, which provide for financing by the ization. Community of refunds paid and inter- vention undertaken 'in accordance with the Community rules within the framework of 110. In view of that, the Member States the common organization of agricultural could not refuse the payment of inter- markets' : the applicants claim that they must vention and export refunds to traders who be interpreted strictly, however. sought such payment in accordance with the applicable Community law. They were not entitled to modify the rules contained in 107. In the United Kingdom's view, in that law and the institutions, which alone order to exclude certain expenditure from were competent to do so, did not adopt any Community financing on the ground that a measures which precluded such payment in Community rule has been violated, it is the event that the catch quotas established necessary to demonstrate the existence of a by the Commission had been exceeded. causal nexus between the infringement and the expenditure which has been disallowed, so that the Commission must show that the 111. If they sought to exclude certain alleged infringement entailed an increase in expenditure from Community financing the

112. By failing to do so, as a number of the 116. In that context the Federal Republic of applicant Member States pointed out, the Germany cited the case-law of the C o u r t l 8 Commission breached the principles of legal to the effect that the principles of clarity in certainty and the protection of legitimate the law and legal certainty require that expectations. rights and obligations deriving from rules which impose burdens must be made known without ambiguity and with clarity. Thus in particular in the economic and politically 113. Ireland, for example, alleged that the sensitive sphere of common agricultural relationship between quotas and the policy financing governed by Regulation No financing of intervention was not established 729/70, given the financial import of until 1983 by Regulation N o 3796/81, so Articles 1 and 2 of that Regulation, it was that the Member States could not know in essential, according to the Federal 1981, when the proposed TACs and quotas Government, for Member States to know were still being discussed and intervention from the start, and clearly, whether certain was being paid pursuant to Regulation N o conduct on the part of one of them could 100/76, that the relationship would be entail for it financial consequences in regarded as legally established. connection with the clearing of its accounts.

123. In that context the response to the crucial question as to the interpretation of 119. Before I go further, I think it must be the phrase in Articles 2 (1) and 3 (1) of admitted that there is a natural relationship Regulation No 729/70 'Community rules between market policy and conservation within the framework of the common measures. As was already stated in the organization of agricultural markets' is preamble to Regulation No 100/76, the clear: it must not be strictly interpreted. common organization of the market in the fisheries sector must take account of the fact that it is 'in the Community interest to preserve fishing grounds as far as possible'; 124. That was precisely the approach even for specific purposes, their preservation adopted by the Court when it explained in undoubtedly constitutes an essential element its judgments of 7 February 197920 and 27 of regularity in market supplies in the February 198521 that Regulation No 729/70 medium and long term, and thus in main- 'permits the Commission to charge to the taining the source of fishermen's income in EAGGF only sums paid in accordance with the Community. the rules laid down in the various sectors of agricultural production' (the emphasis is mine).

120. As Article 40 (3) of the Treaty provides, a 'common organization ... may 125. I see no reason to alter the conclusion include all measures required to attain the which those decisions appear to justify. objectives set out in Article 39'.

126. In the first place, Regulation No 729/70 contains no restriction which would 121. It is incontestable that measures to justify the assumption that Community conserve stocks help to ensure that the aims financing should be refused only when there of the common fisheries policy are achieved: has occurred a breach of particular protecting stocks enables market relations to rules — those of a financial or technical be established and pursued for the nature defining the conditions of form or long-term and on solid foundations, substance governing the payment of sums to provided that the appropriate structures are a beneficiary (for instance, time-limits, rules there for them. fixing prices, calculations of the amount of aid to be given, etc).

ciples underlying the rules in question: the Commission also pointed out, over those of financial burden imposed on the offending a Member State where the Community rules Member State, in a proper apportionment of were observed. Such a breach of the the burdens to be borne, operates also as a principle of equal treatment enunciated in kind of persuasive force to ensure that Article 40 (3) of the Treaty would result in Community law is complied with in its a distortion of the conditions of competition entirety and not only in that part most which would be aggravated if the directly concerned with the payments which Community were obliged to finance such form part of the relationship of 'must/have' conduct. between the EAGGF and the Member States. 132. As the Court stated in the reasons for its decision in Case 11/76 (paragraph 9): 128. As the Commission pointed out, it would be difficult to accept that the EAGGF should finance expenditure incurred as a result of a clear breach of ' . . . the management of the common agri- Community law. cultural policy in conditions of equality between traders in the Member States requires that the national authorities of a 129. In my view, that applies as much to the Member State should not, by the expedient rules fixing the TACs (the total allowable of a wide interpretation of a given catches) as to those which allocate them provision, favour traders in that State to the amongst the Member States. In that respect detriment of those in other States where a I do not agree that a distinction may be stricter interpretation is applied; made (as France submits) between 'conser- vation measures' and 'measures relating to conservation management': observance of the fishing quotas allocated to the fishermen . . . if such distortion of competition between in each country is generally an efficient Member States arises despite the means means of restricting the total volume of available to ensure the uniform application catches under conditions which ensure of Community law throughout the equality between fishermen in the various Community it cannot be financed by the Member States, a principle which can only EAGGF but must, in any event, be borne by be departed from in very special circum- the Member State concerned'. stances (see, for example, Regulation N o 500/87 of 16 February 1987"). 133. In view of the wording of Articles 2 and 3 of Regulation N o 729/70 and their 130. Observance of the quotas, as long as interpretation — in the light of logic and the they exist, must therefore be placed on an aims envisaged by the Community equal footing with observance of the TACs legislator — it does not seem necessary, for the purposes of EAGGF financing. therefore, to have an express provision stipulating that failure to observe one of the rules relating to the conservation policy 131. Failure to abide by quotas by amounts to failure to observe a 'Community fishermen in one Member State would give rule within the framework of the common them an advantage, moreover, as the organization of the agricultural markets' in order for the corresponding financial conse- 22 — Official Journal, L 51, 20.2.1987, p. 3. quences to arise.

134. Such a precise statement of the 11/76 and 18/76) that the provisions of principle might be a dead letter; it is thus Articles 2 and 3 of Regulation No 729/70 clear why the absence of an express 'permit the Commission to charge to the statement of that requirement in Regu- EAGGF only sums paid in accordance with lations Nos 100/76 and 110/76 does not the rules laid down . . . '. suffice to prevent financing being refused for intervention measures on the ground that duly established rules on conservation have been breached. 140. That is also to be inferred from the purposes of the procedure for clearing accounts presented by the Member States for expenditure to be financed by the 135. Nevertheless, it must be admitted that EAGGF, as the Court has defined that it would be going too far to accept that a expenditure.23 minor breach of Community rules, even of the most recondite and insignificant ones, can serve as a ground for refusing finance. 141. In the case in hand there is undoubtedly such a causal nexus as regards 136. That is not the case if fishing quotas the fish caught outside the quotas and have been breached provided that they had covered by intervention arrangements. the necessary legal force: failure to observe them would not only prejudice the achievement of the aims of conserving 142. It might even be present in relation to stocks under the common organization of fish caught within the quotas if it can be fishery markets, but would result in an shown that exceeding the quotas disturbed increase in the expenditure charged to the the market conditions (in particular by EAGGF if it entailed supplementary inter- lowering prices) in such a manner that by vention payments for market withdrawals of that means, too, the total quantity of fish all or some of the fish caught. offered for intervention was increased. Such a relationship is more difficult to establish, however, and that is perhaps reflected in the 137. However, that does not mean, in my way in which the Commission determined view, that there need not be a causal link the method of calculation to be used. between the breach and the additional expenditure incurred. 143. In order to make a proper assessment of the legal position in the case before us I 138. In order for the breach of the think, however, that another factor should Community rules to be penalized in the be taken into account, and that is the context of the clearance of the EAGGF subsequent adoption of Regulation No accounts (and not only under Article 169 of 3796/81; as we know, Article 26 (2) of that the Treaty), the breach must entail financial regulation establishes a link between the consequences, inasmuch as it gave rise to quota rules and those pertaining to financial additional, and unjustified, expenditure. compensation for market withdrawals, but does not do so for export refunds. 139. I think that that is what is to be 23 — Judgment of 7 February 1979 in Joined Cases 15 and inferred from the Court's statement (in its 16/76 france v Commission [1979] ECR 321, at p. 337; judgment of 14 January 1981 in Case 819/79 Germany v judgments of 7 February 1979 in Cases Commission [1981] ECR 21, at p. 34.

144. The Commission maintains that Article between quotas and market withdrawals but 26 was not intended to extend or restrict the not between quotas and export refunds. ambit of the general rule in Regulation N o 729/70, being concerned primarily with relations between the Member States and their nationals, and stipulating, with effect solely from 1 January 1982, that they must 148. As I understand it, however, the refuse fishermen and fishermen's organiz- question here is not whether failure to ations any intervention aid for fish caught in comply with the quotas constitutes breach excess of the quotas. of a 'Community rule', but whether or not it is possible to ascertain whether a quota has been exceeded. From that point of view Regulation No 3796/81, even if it does not necessarily restrict the ambit of Regulation No 729/70, explains in fact the link which it 145. I do not challenge the basis of the is possible to make between Community Commission's interpretation; but I consider financing and compliance with the quotas in that the new legal factor introduced by the the case of intervention measures, omitting adoption of Article 26 (2) of Regulation No any express reference to export refunds, as 3796/81 is relevant even with regard to in the latter case ascertaining that the resolving the difficulties present in 1981. quotas have been breached is, as Community law stands at present, very difficult. That is the only way in which one can explain, since the purpose of Article 26 is to clarify matters, why it did not include 146. In the first place, as regards export both cases, although Title V, 'General refunds, it would be technically very provisions', covers them and Article 25 difficult to establish a method of ascer- expressly provides for the granting of export taining whether or not exported fish came refunds, which were thus excluded from the from catches made within the quotas. Since ambit of Article 26. exporters are able to acquire fish in any part of the Community, owing to the free movement of goods within the Community, the quantity exported cannot simply be deducted from the quota of the country of 149. Hence, although it came into force in export, whose fishermen may have observed 1982, Regulation No 3796/81 must be the quota strictly. Only a costly and relevant: in 1981 the Commission, as it has complicated certification procedure, for conceded, was unable to say with certainty which Community legislation does not that refunds had been paid for fish caught provide and which is incompatible with the in excess of quotas, and it was surely for free movement of goods if introduced that reason that it adopted the 'maximalist' unilaterally, would enable the quantities of approach in its financial calculations. fish caught in excess of the quotas and imported from one Community country to another to be identified.

the natural consequence — unjust though it Council's declaration in the minutes of the undoubtedly is — of the absence of a meeting held on 15 to 18 December 1980, Community system of control. in which it was stated that Member States would conduct their fishing activities in such a way that the catches made by their ships 151. As regards market withdrawals, too, would take into account the TACs (and not however, Regulation N o 3796/81 must be the quotas) proposed by the Commission for regarded as relevant. If it was necessary t o 1981. clarify the situation, it must have been unclear in the past; and regardless of the original position under Article 3 of Regu- 154. The relevant legal context was thus lation N o 729/70, I am sensible to the not sufficiently clear and precise to enable notion that rules which result in the impo- the Member States to know exactly what sition of a financial burden ought to be rules were applicable and to determine clear and precise. Although in the case of without ambiguity the financial conse- market withdrawals the possibility of ascer- quences which the Commission intended to taining whether or not fish has come from attach to breach of them. within the quota is not at issue here, (because it is withdrawn by the national producers" organizations), the Commission 155.

That does not mean that one must a ground for refusing Community financing. accept without reserve the argument put forward by the Netherlands and the Federal 153. Moreover, the Commission's 24 — Sec, for example, Gondrand frères, op. cit., paragraph 17, declaration — which did not expressly and Kloppenburg, op. cit., paragraph 11. In tne latter there appear the following words: ' . . . it is necessary to mention the consequences which it would emphasize, as the Court has already done on several draw from failure to abide by its proposals, occasions, that Community legislation must be unequivocal and its application must be predictable for those who are as regards the clearance of accounts, subject to it'. And in its judgment of 10 July 1980 in Case referring solely, without further expla- 32/79 the Court particularly emphasized— in another context, admittedly, but in terms wnich leave no room for nation, to the use of 'all the means in its ambiguity — that 'the requirement of legal clarity is indeed imperative in a sector in which any uncertainty may well power' — was not adopted until the middle lead to incidents and the application of particularly serious

IRELAND v COMMISSION

Republic of Germany that the Commission 162. Be that as it may, what I have said is ought to have suspended refunds as soon as sufficient to justify the conclusion that the it ascertained that the quotas had been principle of legal certainty — or of exceeded: it is difficult to see how it could legitimate expectations — was breached in a have done so, and in any case, there is not manner sufficient to warrant, on that sufficient evidence that it had available to it ground also, the annulment of the decisions the information necessary for it to do so. at issue.

OPINION OF MR DA CRUZ VILAÇA — CASE 325/85

165. As to the first, I believe that its merits discretionary power to assess the offending should be considered in conjunction with Member States' failure to fulfil its obli- the argument relating to legal certainty and gations and to decide whether to bring an legitimate expectations. It may be admitted action, and may even decide not to bring an that the failure to transform the action if appropriate; in the procedure for Commission's declaration into an act which clearing accounts there is no such possi- was formally binding, within the meaning of bility, and the Commission has merely to Article 189 of the Treaty, reinforced the decide whether the accounts comply with doubts entertained by the applicant Member the rules governing the allocation of States as to its binding force and thus also financial burdens. That is what it did in this strengthened their conviction that it could case, although the parties are in dispute as not entail financial consequences or that it to the ambit of the rules in question. constituted no more than an Opinion'.

IRELAND v COMMISSION

173. The Commission considers that any EAGGF finance, the Commission does not new challenge on that point in the context appear to have taken the most correct of these applications must be regarded as approach for determining the methodology out of time according to Article 42 (2) of for clearing the EAGGF accounts. the Rules of Procedure.

174. In the light of the conclusions I have 181. The result of that method is basically reached on the submissions already that intervention expenditure is primarily examined I do not think it necessary for the assumed to result from fishing carried out in Court to rule on the merits of this new excess of the quotas and thus not eligible submission. for EAGGF financing. Hence, intervention expenditure is eligible for financing only in so far as the quantities which gave rise to 175. I will, however, say a few words about the costs were greater than the quantity of it. fish caught in excess of the quotas.

176. In the first place, I do not think that the objection raised by the Commission 182. The result could be to exclude from regarding the timing of the submission put Community financing both expenditure forward by the applicants is relevant. related to excess catches and that relating to fish caught within the quotas, even before the latter have been exceeded. Even if 177. The Member States concerned have Articles 2 and 3 of Regulation No 729/70 shown adequately that the conditions are interpreted broadly, there is no justifi- imposed by Community law for obtaining cation for refusing, as a matter of principle the finance for which they applied were and subject to proof of the contrary, to met. admit for Community financing expenditure relating to fishing within the quotas.

186. Nevertheless, the Commission did 191. The fact is that once that connection accept any proof to the contrary and was generally accepted in principle it had to various Member States made use of the take into account the fact that the quotas possibility to show the Commission that the fixed by the Commission at that date were intervention expenditure did not relate to applicable for the whole of the 1981 fishing fish caught in excess of the quotas, and on year; what matters, therefore, in principle, is that basis to make it adjust its figures. not the date on which the quotas were fixed, but rather the time when the amount of fish caught exceeded them.

187. Some did not do so, however, when their accounts were being cleared. 192. Only if the quota attributed to a particular country was exceeded before 27 July would there be a problem, but in that case the argument concerning legal certainty would support the argument put forward by 188. It must be recognized in this context the Netherlands. that these applications have not produced all the information necessary to enable us to be certain that each item of expenditure was properly incurred, particularly in the case of Ill — The decisions relating to the 1982 intervention expenditure connected with fish financial year caught within the quotas but which might be the result of the effect on the market of catches in excess of the quotas. 193. As we have seen, in 1982 the legal position differed materially from what it was in 1981.

189. Consequently, in my view, if the Court must decide on this submission it will be 194. Although in that year, too, the Council necessary to request additional information was unable to approve the proposals on from the parties and invite them to submit TACs and quotas put forward by the more detailed argument in this respect, Commission, it adopted provisional which may enable the amount of the expen- measures which were successively renewed diture regarded as having been incurred in throughout the year.

195. Moreover, on 25 January 1983 the differs from that of Ireland. In its Council finally approved Regulations Nos application, the Netherlands stated that in 170/83 and 172/83 fixing, with retroactive 1982 it adopted national restrictions on effect, the TACs for 1982 and their allo- catches based on the most recent proposals cation amongst the Member States. of the Commission, and that the national quota for mackerel was finally fixed at a level which was approved by the Commission. 196. As far as the arguments of the parties are concerned, it is important to note, first, that in Case 239/86 Ireland challenges, as it does in Case 325/85, the power of the Commission to confer any binding character 201. However, as the Commission decided whatsoever on its proposals for TACs and to refuse financing in the amount of HFL quotas. 13 317 224 in connection with export refunds for mackerel which, it maintained, had been granted in breach of the quotas, the Netherlands brought these proceedings, 197. For the reasons already set out denying that financial consequences in the regarding that submission in connection context of EAGGF accounts could attach to with the previous applications, it is doubtful failure to observe the quotas, if indeed the whether the absence of approval by the failure to respect them could be proved. In Council of the conservatory measures which substance it alleged: (a) that the conser- it had power to adopt was compensated for vatory measures, being based primarily on by the Commission in the proper manner, biological considerations, were entirely that is to say, on the basis of the consul- distinct from market policy; (b) that neither tation procedure which I have described. Regulation No 100/76 nor Regulation No 3796/81 on the organization of the markets contained any restriction on the quantities of fish in respect of which export refunds 198. In 1982 the Council did adopt a series could be granted, and even if such of provisional measures; they were limited, restrictions did exist they would be inap- however, to stating that as a guideline the plicable in the absence of controls; (c) that Commission's proposals should be taken Regulation No 729/70 merely linked eligi- into account, without conferring on them bility of expenditure for financing by the unambiguously binding legal force. EAGGF to compliance with the rules on the organization of the markets, the Commission's view amounting to an erroneous extension of those criteria to 199. Be that as it may, the argument relied other elements of Community law entirely upon by Ireland in this respect loses some of foreign to market functioning; and (d) that, its force when compared with the consequently, the TACs and quotas Commission's allegation, in Case 325/85, proposed by the Commission for 1982 must that the retroactive approval of the TACs not be regarded in that respect as and quotas by Regulation No 172/83 was Community rules for the purposes of Article sufficient to remove any irregularities. 2 (1) of Regulation No 729/70.

submission in the applications challenging 208. Admittedly, as we have seen, the back- the decisions concerning 1981. ground to the dispute is somewhat different here to what it was as regards 1981, particularly in view of the fact that in 203. In my view, the relationship between Ireland's casé the application concerns not conservatory measures and the organization only expenditure connected with export of the markets does not, in principle, permit refunds but also expenditure connected with them to be excluded from the ambit of the withdrawals of fish from the market.

205. It should be borne in mind, moreover, failure to comply with which was to be that Regulation N o 3796/81 established, on sanctioned by the refusal of financing by the 29 December 1981, that link expressly only EAGGF. with regard to market withdrawals, excluding from its ambit export refunds, whereas the Netherlands' application concerns solely the latter. As the Commission itself acknowledged, the 210. It appears in fact that, despite the enormous difficulty of supervision in that declaration made by the Commission on 21 regard is largely sufficient to explain the July 1982 and the Council's provisional legislature's caution, there being no reason decisions, and in spite of the new element to be more strict in that regard with represented by Regulation No 3796/81 Member States than with itself. (published on 31 December 1981 and applicable from 1 June 1982 27 ) the truth is that the TACs and quotas were not fixed

207. A similar conclusion applies to the of the arguments which might be based on the existence of the last-mentioned regulation as regards 1982. It did not application lodged by Ireland, which also affect Article 26 (2), and did not suspend its application, so that from 1 June 1982 the rule contained in that Article relies expressly in this context on the alleged applied to the provisions in Regulation No 3796/81 which breach of the principles of legal certainty were not suspended by Regulation N o 1865/82 (that is to say, Articles 8 and 16 to 18) and, if necessary, to Article 11 and the protection of legitimate expec- o f Regulation No 100/76 itself, which Regulation N o 1865/85 reintroduced with effect from 31 December 1982.

IRELAND v COMMISSION

211. For the whole year the Member States Netherlands. In the alternative, it submitted were simply invited to take into account the that the Commission did not take into TACs proposed by the Commission, which, account in its calculations the quantities of moreover, did not include an allocation of fish coming from zones not subject to catches between the Member States. quotas (40 501 tonnes of mackerel, according to the shipping authorities). 212. In the circumstances, even bearing in mind the prudence which should be 215. The Commission challenged the exercised in regard to the conservation of figures provided by the Netherlands and stocks and the responsibilities of the explained that the reply to a parliamentary Member States in the light of Article 5 of question on which the Netherlands also the Treaty, they could not have been based its argument was not relevant, since it required to observe, during the 1982 fishing dealt with mackerel fishing in general and year, a quota which they could only guess not mackerel fishing solely by Community at, even after examining the Commission's fishermen, there being no reference to the proposals. Netherlands' share in the catches coming from non-Community waters. 213. Ireland considers that in the circum- stances it could not be said that in 1982 there were clear and precise rules breach of 216. Should the Court rule on that aspect which could justify refusal to finance inter- of the question, it would doubtless be vention under Anicie 3 of Regulation No necessary to request further explanation and 729/70. additional proof in order to enable the Netherlands to establish its case in 214. A few words now on another question accordance with the rules concerning the raised by the Government of the onus of proof.

218. If that approach is not adopted by the Court, I consider that it will be necessary to reopen the procedure in order to obtain additional information and proof to enable the Court to review the calculations made by the Commission and, hence, the figures challenged in the clearance of the accounts.

219. In accordance with my main conclusion I propose that the costs of the proceedings should be borne by the Commission (Art. 69 (2) of the Rules of Procedure), with the exception of those in Case 326/85, in which each party must bear its own costs because there was no request that the defendant be ordered to pay the costs.