C-143/88

ZUCKERFABRIK SÜDERDITHMARSCHEN AND ZUCKERFABRIK SOEST

OPINION OF MR ADVOCATE GENERAL CARL OTTO LENZ delivered on 8 November 1990*

Summary

A — Facts 47g

B — Opinion 479

I — The first question 479

(a) Objective of Regulation No 1914/87 499

(b) Was there a legitimate expectation on the part of sugar producers that their obligation to make up losses would be limited? 499

3. Prohibition of the burdening of an economic sector with extraneous risks and the disproportionate nature of the levies 502

(a) Burdening of an economic sector with extraneous risks 502

(b) Observance of the principle of proportionality 503

4. Breach of the prohibition of discrimination 503

OPINION OF MR LENZ — CASE C-143/88

5. Protection of the right to own property and the freedom to pursue an economic activity 508

(a) Interference with the right to own property 508

(b) Interference with the freedom to pursue an economic activity 509

6. Breach of the principles governing the levying of taxes in the German legal system 510

Costs 510

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Düsseldorf, has also sought a preliminar)' 5. I would refer to the Report for the ruling from the Court of Justice on the Hearing for the facts of the case, the question of validity. 3 The Finanzgericht reasoning of the Finanzgericht and the Hamburg has referred the following arguments of the parties, which I shall questions to the Court of Justice: mention or discuss hereinafter only in so far as is necessary for the understanding and reasoning of my Opinion.

B — Opinion '(1) (a) Is the second paragraph of Article 189 of the EEC Treaty to be inter­ preted as meaning that the general I — The first question application of regulations in Member States does not preclude the powers of national courts to suspend, by way of an interim 6. The parties in the main proceedings have measure, the operation of an very different views on the answer to be administrative measure based on a given to the first question. regulation until a decision is reached in the main action?

7. The national court is itself uncertain as to the jurisdiction of national courts to suspend enforcement of a measure, on the ground that such a decision could cast doubt on the direct applicability of regu­ (b) If so: under what conditions may lations in all Member States in accordance national courts adopt interim with the second paragraph of Article 189 measures? Is there an applicable of the EEC Treaty. At the same time, criterion of Community law and if it acknowledges that suspension of so which? Or do interim measures enforcement, in the same manner as the depend on national law? suspensory effect of an appeal in ordinary administrative proceedings, does not affect the existence of the administrative measure and consequently does not strictly encroach on the validity of the Community legis­ lation.

I. The views of the parties 12. Finally, the granting of interim relief follows necessarily from the system of protection under the Community legal order, under which, depending on the implementing measures of Community law, 9. The plaintiff does not share the doubts of interim measures may be ordered by the the national court, if only because the European Court of Justice or by national suspension of enforcement in no way places courts. in question the effectiveness of the Community regulation. The only thing which is postponed is the date on which the amount due must be paid. Furthermore, no doubt is cast on the effectiveness of the 13. Although the plaintiff considers it regulation in the economic sense, since the unnecessary to address Question 1(b) in person claiming interim relief must, in the view of its opinion on Question 1(a), it does event that he should fail in his claim, pay submit that national authorities and courts interest for delay at 3 % above the discount may grant interim relief against national rate of the Deutsche Bundesbank, regardless enforcement measures only in accordance of any security lodged. with the requirements of national procedural law. As is the case with other procedural questions under the national legal systems, it has to be accepted that there may be discrepancies between the 10. The plaintiff also argues that if the various Member States of the Community. Court admitted an exception to its monopoly on ruling on the validity of Community legal measures in proceedings for interim relief in Case 314/85 (Foto- 4 Frost ), a case which concerned the validity 14. The Commission also proceeds essen­ of a decision by the Commission in a tially on the basis of the idea that a national specific case with respect to a Member court may suspend the execution of an State, this must apply a fortiori in the case administrative measure 'without having to of enforcement measures adopted by await the outcome of a reference under national authorities. Anicie 177 to confirm its doubts as to the validity of the Community measure which forms the basis for the administrative act in question'. 5

16. On the other hand, according to the Commission, the urgency which is normally a characteristic of an interim decision argues 19. The Commission develops a point of against prior completion of the preliminary view of its own as to how full account is to ruling proceedings in view of the length of be taken of the Community's interests. time required for the Article 177 procedure, if only because of the participation therein provided for under Article 20 of the Statute of the Court of Justice of the EEC. 20. According to this view, the question of the validity of the legal measure must be submitted to the Court of Justice at the same time as enforcement is suspended, even though this is at variance with 17. However, the Commission raises the dogmatic reservations and reservations question whether specific circumstances concerning procedural economy which are deriving from Community law must exist in based on the fact that no decision has yet order for suspension of enforcement to be been taken on the validity of the measure of permitted. One might, for example, think of Community law and a reference to the criteria deriving from Article 83 of the Rules Court of Justice might subsequently prove of Procedure of the Court, namely the need to be unnecessary. According to the 'to prevent serious and irreparable damage' Commission, the following arguments or the initiation of the main proceedings at militate in favour of the manner of the same time as the application for interim proceeding proposed by it: in the first place, relief. Even though this latter criterion will the temporary interference with the in general be satisfied where an order is decision-making monopoly of the Court of made for the suspension of enforcement of Justice with respect to the validity of an administrative measure, the Commission Community law measures is kept to a does not believe it justified to impose such minimum. That monopoly is recognized, additional conditions 'because this would in while at the same time effective legal fact require an amendment to the rules of protection is granted. the courts in the Member States'.

23. The Commission believes that the 27. The Italian Government, on the other manner of proceeding proposed by it merely hand, adopts a more qualified position. It gives concrete effect to the reference to the argues that national courts are at liberty to Court of Justice which is in any case suspend, by way of interim protection, the provided for under Community law and operation of administrative measures based makes it possible to avoid interference with on Community regulations, even though the the national proceedings relating to Court of Justice has not yet declared the suspension of enforcement. regulation in question to be invalid. In support of this contention, the Italian Government argues that this conclusion is derived from the allocation of jurisdiction between national courts and the Court of 24. The Commission has also put forward Justice as laid down in the EEC Treaty. substantive arguments against a possible Moreover, an interim decision does not refusal to recognize the power of national affect the validity of the regulation but is courts to suspend enforcement of an admin­ simply a protective measure which does not istrative act in proceedings for interim relief. anticipate any future decision. Confidence in the Community legal order could be permanently shaken in such a case, since an individual might in certain circum­ stances be deprived for several years of his rights in view of the length of time taken by 28. Referring to the Opinion of Mr proceedings for a preliminary ruling. Advocate General Mancini in Case 314/85, 6the Italian Government points out that the interim relief sought may not be rendered ineffective by the length of the preliminary rulings procedure. Any refusal 25. The Commission also wonders whether to allow a national court to suspend a ques­ the right to effective legal protection must tionable administrative measure would have not as such be regarded as a fundamental serious consequences for individuals, given right. In any event, the situation in point is that they are not entitled to contest the very close to those protected by the Basic validity of the Community regulation in Law. The principle of rapid legal protection question directly before the Court of also finds expression in the Community Justice, something which is tantamount to legal order, namely in Articles 185 and 186 depriving them of any legal protection. If, of the EEC Treaty. In any case, it is a principle that is closely linked to that of the 6 — Opinion in Case 314/85 Foto-Frost v Hauptzollamt uniform application of Community law. Lüeck - Ost [1987]ECR4199.

31. The United Kingdom believes that the apprehended distortion of competition 29. The United Kingdom takes the opposite could manifest itself in all areas affecting view. It believes that national courts should the parties involved, that is to say the not be recognized as having the power 'to undertakings producing sugar as well as the suspend, by way of an interim measure, the sugar-beet producers, by virtue of the operation of an administrative measure power, for which provision is made, to pass based on a regulation until a decision is on liability for the levy. Should the reached in the main action concerning that Community provision be declared unlawful regulation'. If this were not the case, the and invalid, it would always be possible integrity and uniform application of subsequently to repay the levies. Community law would be placed in jeopardy. In reaching its view on this question, the United Kingdom starts from 32. It also submits that the uncertainty the premise that the EEC Treaty was surrounding the Community regulation is intended 'to establish a coherent system of the same in the proceedings for an 'interim legal remedies and procedures designed to decision' as in the main proceedings. enable the Court of Justice to review the However, the United Kingdom does accept legality of measures adopted by institutions'. that there may be exceptions, as, for It also proceeds on the assumption that if example, in cases of hardship. In such cases, national courts were entitled to grant such however, it is necessary to adopt protective interim relief, they would be determining measures in accordance with the rules of 'the validity of acts of Community national procedural law. institutions'.

case-law on the subject. With regard to the 36. The Court, in its judgment in Foto- obligation to make a preliminary reference, Frost, bases itself on the coherence of the there is first of all the judgment in Case system of judicial protection established by 314/85 (Foto-Frost), in which the Court first the Treaty. 9 Since Article 173 gives the of all laid down the rule that it alone has Court exclusive jurisdiction to declare void jurisdiction to declare acts of Community an act of a Community institution, the institutions to be invalid, and that national coherence of the system requires that where courts are not entitled to make such a the validity of a Community act is chal declaration themselves. However, the Court lenged before a national court the power to added that such a rule 'may have to be declare the act invalid must also be reserved

34. The Court did not on that occasion is a possibility that this issue will be refer to its earlier case-law, to the effect re-examined in the subsequent main that the third paragraph of Article 177 must proceedings and that it may form the subject be interpreted as meaning that 'a national of a reference under Article 177. court or tribunal is not required to refer to the Court a question of interpretation or of validity . . . when the question is raised in interlocutory proceedings for an interim

35. Admittedly, in 1977, the year in which proceedings for interim relief. this judgment was delivered, the decision in Foto-Frost did not exist, coming as it did only 10 years later. It is for that reason necessary to examine whether the decision 39. In its judgment in Hoffmann-La Roche v in Hoffinann-La Roche v Centrafarm can still Centrafarm, the Court held that there was be upheld in the light of the decision in no obligation to make a reference for a Foto-Frost. 9 — Loc. cit., at paragraph 16. 7 — [1987] ECR 4199, at paragraph 19 of the judgment. 10 — Loc. cit., at paragraph 17. 8 — Judgment in Case 107/76 Hoffmann-La Roche v Centrafarm 11 — Judgment in Foto-Frost, loc. cit. at paragraph 13 (see also [1977] ECR 957. point 1 in the summary).

preliminar/ ruling, on the ground that such court hearing an application for interim a reference could subsequently be made in relief to cast doubt on the validity of the main proceedings. That is precisely the Community measures if it is not empowered reasoning which ought to have led, in Foto- to do so in the main proceedings? The only Frost, to a ruling that there was no obli argument possible in this regard is that the gation to make a reference. There was an interim protection which an applicant seeks opportunity in that case to raise such an in instituting summary proceedings can be issue during the appeal proceedings, since frustrated by reason of the time taken up by the Court of Justice had proceeded on the the proceedings for a preliminary ruling (see basis that an appeal could still be brought the Opinion of Mr Advocate General against the judgment of the court making Mancini, loc. cit., at 4221). the reference. After the judgment in Foto- Frost, this point of view is in itself insuf ficient as a ground for precluding the obli

45. There is no danger in the present case is placed in jeopardy and the fundamental that the time taken up by the reference for a requirement of legal certainty is impaired if preliminary ruling will frustrate the interim there are divergences between courts in the relief which the applicant seeks by insti Member States as to the validity of tuting summary proceedings. The Community acts. proceedings are stayed until such time as the Court has delivered its ruling on the questions referred to it.

If Justice. we suppose that the court before which the matter is brought confirms the suspension of execution in view of its doubts on the 42. Thirdly, the Court of Justice is in the validity or efficacity of the Community best position to decide on the validity of measure, the question referred by the first Community acts. court remains relevant and, since it is already before the Court of Justice, the point of law may be clarified all the more quickly. 43. These considerations are of course also applicable in the case of proceedings for 12 — Order of the Finanzgericht Hamburg seeking a interim relief. How could it be possible for a preliminary ruling, II.

47. It is thus in the interests of procedural to seek a preliminary ruling are in no way economy that the question at issue has mutually exclusive. already been submitted to the Court. If the case is settled without any decision in the main proceedings, the doubts previously 51. If the proceedings continue before the raised are not dispelled and a decision by court which is dealing with the main issues the Court is thus necessary despite the the argument of urgency loses its force. It settlement reached in the specific case in may consequently be expected in this regard point. that the court dealing with the main issues will base its decision on the judgment of the Court of Justice, in so far as it considers

The first or second court could have or ought to predominant view is that 'the preliminary have withdrawn the request for a ruling is binding for the purposes of the 13 proceedings which gave rise to the reference preliminary ruling. by the national court'. 14 According to this view, both the higher court and the lower court, which must give a decision following 49. If the court dealing with the substantive the referral of the case back to it by the issues does not share this doubt as to higher court, are bound by the ruling.

case, the Court of Justice must give its ruling if the reference has not been withdrawn. The same also applies with 53. Nor may it be objected to this that the regard to questions on interpretation. question referred in the case was judged by the court called upon to decide the case to be quite unnecessary for the purpose of reaching its decision: if that court has such 50. It is not necessary in the present case to doubts as to the validity or effectiveness of decide this matter. Contrary to the theory underlying the present case-law of the 14 — See Dauses Das Vorabentscheidungsverfahren nach Artikel Court, therefore, urgency and the obligation ¡77 EWG-Vertrag, Luxembourg 1985, p. 101; Everling Das Vorabentscheidungsverfahren vor dem Gerichtshof der Europäischen Gemeinschaften, Baden 1986, p. 63; in this 13 — On this point, see Dauses Das Vorabentscheidungsverfahren connection, also with regard to superior courts, see nach Artikel 177 EWG-Vertrag, Luxembourg 1985, pp. 83 Chevallier and Maidani Guide pratique article 177 CEE, to 85. Luxembourg 1981, p. 96.

the Community measure in question that it are 'undesirable', 'improper' or liable to considers it necessary (after weighing all create 'grave problems'. relevant interests) to suspend enforcement of the administrative measure, then it requires this decision so that it may either 56. Those consequences are that, although lift the suspension if its doubts are dispelled Community law is not rendered inoperative, or, should its doubts be confirmed, maintain its effect is held in abeyance and confidence it. in its validity is adversely affected.

ruling. Such a situation is analogous to that validity of acts — which the third paragraph where a lower court refers a question for a of Article 177 expressly removes from courts 16 preliminary ruling which the higher court of last instance'. does not regard as necessary. The Court of Justice must, in this case too, also give a ruling if the request for it has not been 58. The main argument then put forward withdrawn. The second paragraph of Article by Mr Mancini is dogmatic in nature, as it 177 of the EEC Treaty takes account of this concerns the contradiction engendered by possibility. the recognition of such a power within the system which entrusts to the Court of Justice alone the task of reviewing the legality of Community acts.

It is securing legal certainty and — which is necessary in this regard to proceed on the equally, if not more, important — of guar basis that the courts of a Member State anteeing the legal cohesion of the constitute an autonomous and independent 16 Community. branch of the sovereign authority of that Member State and that for this reason a 15 — Mancini, loc cu., at 4218, Mancini refers in ihat context declaration by such a court that a measure to, inter alia, Brown and Jacobs, The Court of Justice of the of Community law is invalid is a serious Europea» Communities, London 1983, p 154 et seq —see now Third Edition, p 173 matter and gives rise to consequences which 16 — Loc. cit., at 4218.

66. However, even if it is possible to initiate 62. I am not sure that this view is valid in further proceedings, it is not at all certain all cases. that the authorities of the Member State, who have been unsuccessful in the first instance, will lodge an appeal on grounds of 19 Community law. 63. An interpretation which, in the specific case in point, deprives a provision of its effectiveness is often tantamount in practice to contesting its validity: whether a court 67. Finally, even if this does happen, it is questions the validity of a provision or far from certain that the appeal court will be interprets it in such a way as to render it obliged to refer the matter (indeed, the view inapplicable to the case in hand, the taken by the Court in Hoffmann-La Roche v practical consequences are identical. 17 Centrafarm is that this is definitely not the case) or that, even if it is so obliged, it will in fact make such a reference.

However, if such questions are raised, the and from this the inference was drawn that court concerned must in my opinion help to 'its nature would prevent it from becoming remove such doubts as soon as possible. a precedent endangering uniform This view does not impose a restriction on compliance with Community law, even if it the national court's freedom of action, but it placed an erroneous interpretation on that 20 does limit the negative consequences which law'. this may have for the legal order of the Community 73. In my view, the decisive factor is the realization that the effectiveness of

necessari considers legislation, on the validity of which the decision in the case turns, to be 21 unconstitutional. In accordance with this, 71. In any event, until such time as the the Federal Government argued in the decision to seek a preliminary ruling has Foto-Frost case 22 in favour of the obligation been made by the court hearing the case in to seek a preliminary ruling. the later proceedings, there will be a period during which the court to which application was made for interim relief contests the 3. Conclusions

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78. For the reasons set out above, that view 82. It ensures the precedence of cannot be accepted. On the contrary, it is Community law, in so far as it requires the necessary even in proceedings for interim courts of the Member States, in this context relief to proceed on the basis of the also, to have due regard for the objectives supremacy of Community law and to of Community law. protect the Community's interest as expressed therein.

83. It guarantees the independence of the 79. It finally remains for me to express a courts of the Member States and their view on the question whether the freedom of decision, since they can give free restrictions cited also apply if implemen­ expression to any doubts they may have as tation is suspended for reasons which do not call in question the validity of the legal 23 — Finanzgerichtsordnung (Rules of the Finance Courts), second alternative in the second sentence of Paragraph order of the Community. The implemen­ 69(2).

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to the validity of Community law or to the II — The second question ineffectiveness of its provisions.

(i) the regulation is founded on an 88. The national court is bound by incorrect legal basis. It should not Community law with regard to the nature have been based on Article 43 of the and extent of the suspension. EEC Treaty, but on Article 201 of the EEC Treaty in view of its character as a financing levy;

89. The court dealing with the substance of 24 — See Article28(3) and (4) of the basic Council Regulation the case must base its own decision on that No 1785/81 of 30 June 1981, OJ L 177, p. 4 of the Court of Justice regarding the 25 — See Article 32a of Regulation No 1785/81, as amended by Council Regulation No 934/86 of 24 March 1986, OJ validity of the Community measure. L 87, p. 1.

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(vi) the regulation infringes the funda­ mental principles of the protection of 93. Objection is taken to the introduction property and freedom to pursue of the special elimination levy under Article economic activities, since the amount 43 of the EEC Treaty on the ground that of the levy constitutes an interference this does not constitute a measure regulating in the very substance of the under­ the sugar market, but is rather exclusively takings ; a financing levy. A measure designed to regulate the market can relate only to the present or to the future, but not to the past. (vii) the regulation is vitiated by misuse of Furthermore, the third recital in the powers, since the special elimination preamble to the contested regulation refers levy is in reality a financing levy which expressly to 'severe budgetary constraints on is strangulatory in its effect; the Community'.

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(a) ... duties established or to be established ... in respect of trade with non-member 96. In determining the correct legal basis countries within the framework of the for the adoption of the special elimination common agricultural policy, and also levy, it is necessary to decide whether it has contributions and other duties provided the character of a charge for the regulation for within the framework of the of the market or whether, as submitted, it is common organization of the markets in exclusively designed to finance a budgetar}' sugar;

26 — Decision on own resources (OJ 1985, L 128, p 15). 27 — My emphasis.

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(b) ... shall constitute own resources charge was still one which had previously entered in the budget of the been introduced or whether it had to be Communities. regarded, in view of the change in its legal nature, as a newly introduced charge.

100. The wording and objective of the provision would suggest that it covers not 102. The legislative procedure under Article only charges introduced in the past, since 201 of the EEC Treaty, which requires there would otherwise be a danger that consultation with the Parliament, unanimity charges which are in fact identical would on the part of the Council and adoption by be included automatically among own the Member States in accordance with their resources solely on the basis of the date on respective constitutional requirements, as which they were adopted, whereas others referred to in the second paragraph of would require compliance with the Article 2 of the Decision on own resources, complicated procedure under Article 201 of the EEC Treaty followed by ratification 29 — Judgments in Case 108/81 Amylum Council [1982] ECR under the legal systems of the Member 3107, at paragraph 33, and in Case 110/81 Roquette Frères States. Thus, in the case of a simple v Counsil 1982) ECR 3159, at paragraph 39. 30 — Council Decision of 21 April 1970 on the replacement of alteration in the modalities of a charge, the financial contributions from Member States by the question could arise as to whether the Communities' own resources (OJ, English Special Edition 1970 (Ï), p. 224): 'contributions and other duties provided for within the framework of the organization of the 28 — Translator's note: This observation is based on the German markets in sugar'. text of the provision. 31 — Case 108/81, loc. cit., at paragraph 33 of the judgment.

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106. In the event that the special elimination levy falls to be treated as a levy within the context of the common organization of the market in sugar and therefore comes under 103. With regard to the identical provision subparagraph (a) of the first paragraph of contained in the second paragraph of Article Article 2 of the Decision on own resources, 2 of the Council Decision of 21 April 1970, this cannot in any way justify the conclusion the Court has held that the only purpose of that the Council had no power to adopt that that provision is to allow new own resources measure, on the ground that it relates by to be created within the framework of a definition to 'own resources'. The Court has common policy, provided that the procedure held on numerous occasions with regard to laid down in Article 201 is followed. the Decision on own resources and the 'However, that provision cannot be inter­ legislation preceding it 'that its purpose is to preted, contrary to its wording, as making define own resources allocated to the the procedure laid down in Article 201 Community budget and not to stipulate compulsory for the adoption of a measure the Community institutions which are which is part of a common policy merely competent to impose duties, taxes, charges, 34 because the measure entails the collection of levies or other forms of revenue'. The revenue'. 32 power of the Council to create a levy has its basis in the provisions of the Treaty relating 35 to the Common Agricultural Policy.

legal basis for Regulation No 1914/87, it is 108. The measures designed to rectify the necessary to proceed on the basis that consequences of surplus production, Article 43 must be interpreted in the light of which were originally intended to be for a 36 Articles 39 and 40 of the EEC Treaty. limited period only, may be described in This means that in order to attain the terms of an evolutionary period during objectives set out in Article 39 a common which legal rules were created to deal with organization of agricultural markets must be events on the market and if necessary to established under Article 40 and 'this organ­ direct them. These measures comprise, on ization may include all measures required to the one hand, the rules governing 37 attain the said objectives'. In considering production quotas and, on the other, those whether a measure adopted on this basis is relating to the imposition of production lawful, it is necessary, according to the levies designed to finance export refunds. case-law of the Court, to recognize that the When it became apparent that the basic Council carries the political responsibility production levy and the B levy were and must be accorded a corresponding inadequate to cover the deficits which were 38 discretion. By seeking to restrain being created, it was decided to levy a production in the face of surpluses that have charge spread over the marketing years been found to exist, the imposition of a levy 1986/87 to 1990/91 for the actual expen­ contributes to the attainment of the diture incurred in respect of exports during 39 objective of stabilizing markets. The the 1981/82 to 1985/86 marketing years. principle of self-financing for the sugar This was done through the insertion into sector was introduced by way of the basic the basic regulation of provisions relating to 40 regulation in force at the time of the an elimination levy. adoption of the special elimination levy. Express reference is made in the recitals in the preamble to the basic regulation to the desire 'to provide the Community with the 109. Market developments soon revealed instruments necessary to ensure, in a fair yet that there would also be considerable efficient way, that the producers themselves deficits in respect of the marketing years meet in full the cost of disposing of the succeeding those from 1981/82 to 1985/86 surpluses of Community production over 41 and that the existing legal instruments consumption'. The specific legal par­ would be insufficient to enable those deficits ticulars of the measures for attaining that to be made up. In order to counter this objective are set out in Article 28 of the emerging trend as quickly as possible, the regulation and have hitherto been subject on disputed special elimination levy for the numerous occasions to amendments in view 1986/87 marketing year was introduced by of the fact that the provisions in force were 43 way of a separate regulation. in each case sufficient only to cover a part of the costs.

special elimination levy and to the grounds made subject to the levy, a situation on which it is based. The common organ contrary to the objectives of the organ ization of the market in sugar, as ization of the market in sugar which was introduced by the basic regulation, expressly adopted only for the benefit of constitutes the only basis which is put sugar-beet growers. forward in the preamble to Regulation No 1914/87. With regard to the anticipated losses, reference is made to the forecasts in Article 28 of the basic regulation and the provisions of Article 28 are also referred to 113. It is of no account whether the sugar- as constituting the basis for calculating the producing undertakings are to be regarded special elimination levy. Reference is even as producers or as consumers within the made to the procedure provided for in the meaning of Articles 39 and 40 of the EEC basic regulation for the purpose of adopting Treaty. It is in any event beyond doubt that

have become necessary, and is conse quently inextricably associated with the 'it is necessary that these regulatory rules relating to the existing organization of measures [price guarantees] should provide the market. The argument that Regulation guarantees which are fair both to manufac No 1914/87 was adopted outside the turers and to producers of the basic 46 framework of the common organization of product'. the market in sugar and for that reason cannot be regarded as a regulatory measure ultimately emerges as the expression of a purely formalisticpoint of view. In truth, the special elimination levy must, if we 114. The entire price-regulation mechanism consider both its intention and purpose, be applies not only to basic products but also regarded as complementing existing to sugar. Title I of the basic regulation provisions on the organization of the provides that a target price for white sugar is market. The choice of Article 43 of the to be fixed for each marketing year. EEC Treaty as the legal basis for the regu Likewise, an intervention price is to be fixed lation cannot therefore be questioned. both for raw sugar and white sugar (Articles 2 and 3 of the basic regulation). The pricing arrangements governing trade with non-member countries therefore also apply 112. To finish with the question of proper to sugar (Title II of the basic regulation). legal basis, it is still necessary to address the Under the conditions there specified, sugar argument to the effect that, unlawfully, producers can thus qualify for export refunds sugar-producing undertakings alone are when they export their products outside the Community. The Community quota rules, 44 — Article 1(4) of Regulation No 1914/87, with reference to one element in the price guarantees, also Article 41 of the basic regulation. 45 — Fourth recital in the preamble to Regulation No 1914/87 46 — Fourth recital in the preamble to the basic regulation.

118. So far as the possible retroactive effect of legal consequences is concerned, it can 116. In order to be in a position to decide be said that there is indeed such an effect. whether Regulation No 1914/87 is invalid Although the date from which the regu­ by reason of retroactivity, it is first lation is operative is not shifted to a point in necessary to address the issue of whether time prior to its entry into force, all the and to what extent it must be regarded as facts to which it relates predate, as has retroactive in its effect. In so far as Regu­ already been seen, its entry into force. The lation No 1914/87 entered into force on the legal consequence of the regulation, that is day of its publication, 2 July 1987, and to say, the creation of the liability to pay the

47 — Anicie 5 of the basic regulation; see also Regulation No 206/68 of 20 February 1968 on provisions governing 49 — See Article 2(1) of the basic regulation. contracts and group agreements relating to the purchase 50 — See Article 1(2) and (4) of Regulation No 1914/87 and of sugar beet, Journal Officiel 1968, L 47, p. 1. Commission Regulation No 3061/87 of 13 October 1987 48 — Articles 28 and 5 of the basic regulation. (OJ 1987, L 290, p. 10).

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(a) Objective of Regulation No 1914/87 (b) Was there a legitimate expectation on the part of sugar producers that their obli­ gation to make up losses would be limited?

120. The objective of Regulation No 1914/87 is to reinforce the principle that the 123. This question must be examined in the sugar sector should be self-financing, a light of the existing legislation. principle anchored in the common organ­ ization of the market in sugar since the beginning of the 1980s. The initial intro­ duction of production levies and the subsequent imposition of the solidarity levy 124. Regulation No 1785/81 52lays down were designed to realize that objective. the principle that producers themselves should meet costs in full, although this system should apply for a limited period only and should be regarded as transitional. Article 28, however, sets out maximum 121. The legislature has in principle a wide amounts for the levies necessary to cover discretion with regard to defining in costs, and these maximum amounts may not 53 concrete terms the detailed rules for the be exceeded. organization of agricultural markets and the selection of objectives to be pursued therein, 51 — Sec the preamble to basic Regulation No 1785/81 52 — 11th recital in the preamble. subject to the condition that such objectives 53 — Sec paragraphs 3 and 5 of Article 28 of Regulation No must not constitute a misuse of powers. It is 1785/81

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OPINION OF MR LENZ —CASE C-143/88

125. These texts do not answer the question but it does introduce a new elimination levy of what happens if the full financing of the 'designed to eliminate the ECU 400 million costs by the producers is not achieved by deficit recorded following application of the means of the maximum amounts specified. I quota arrangements in the period 1981/82 57 do not believe that this is sufficient to give to 1985/86'. rise to a legitimate expectation that the maximum amounts will not be exceeded.

131. This however was the situation when 127. The principle of limitation is clearly the contested Regulation No 1914/87 was expressed in this regulation. adopted. A legislative measure which is self- contradictory cannot give rise to any legally protected expectation. This is particularly the case where public authorities are required to shoulder the costs of their own 5 128. Regulation No 934/86 6reiterates 'the economic activities. In the absence of a principle that producers are financially liable clear, unambiguous and legally binding for all ... losses' and, in addition to changes consent on the part of the person who bears in the system of financing, introduces an the costs, there can be no legally protected elimination levy for this sector. The regu­ expectation. lation also contains a provision to the effect that at the end of the 1987/88 marketing year there is to be recorded cumulatively for the two marketing years 1986/87 and 1987/88 inter alia the total sum of the basic production levies and the B levies charged. 132. There could therefore be no justified expectation on the part of producers that the Council would adhere to certain limits and depart from the principle that producers should be fully responsible for all losses. 129. This regulation does not alter the The Council was therefore not precluded by maximum limits for existing contributions, the principle of legitimate expectation from imposing on producers the charges resulting 54 — OJ 1985 L 167, p. 2. 55 — First recital in the preamble. 57 — See Article 32a. 56 — OJ 1986 L 87, p. 1. 58 — Second recital in the preamble.

133. An attempt has also been made to 136. In addition, this solution would have derive from Council Regulation No been impossible for the 1986/87 marketing 1107/88 59 (concerning the introduction of year, since the overall loss only became an additional levy) arguments in support of known after the quotas had already been the existence of a pre-existing legitimate used up. Moreover, the special elimination expectation or of the contention that the levy only affected those economic operators Council had previously bound itself in the who had been responsible for the deficit to

137. If the view is not accepted that sugar forced is not an effective argument against producers could not have acquired, on the Regulation No 1914/87. basis of the existing tests, a legitimate expectation that the Community would cover the deficits for which they were responsible, or in any event that they could not have continued to nurture such an 134. It is quite clear and not open to dispute expectation, account must be taken of the that the original mechanisms for the self- matters which the United Kingdom, the financing of the sector were inadequate and Council and the Commission have put resulted in deficits which had to be made into consideration. These are that the good.

All this information was available to sugar pro ducers through the specialized press, and 135. Furthermore, it should be pointed out for that reason they could not have been that the Community had to choose at that surprised by the introduction of the special time between introducing a special elimin elimination levy. These arguments would ation levy and reducing production quotas. also suggest that the Council acted quite properly in adopting Regulation No 59 — Council Regulation No 1107/88 (OJ 1988 L 110, p. 20). 1914/87 and did not infringe the principle 60 — Sixth recital in the preamble to Regulation No 1107/88, of the protection of legitimate expectations. loc. cit.

138. My examination of the issues raised dollar, may not be passed on to operators has not, up to now, brought to light any within the relevant agricultural sector in the factor of such a kind as to affect the validity form of financial charges. The description of the regulation. of such factors as 'extraneous risks' itself appears questionable. Admittedly, we are dealing here with circumstances which lie outside the sphere of influence of producers within the internal market as well as outside 3. Prohibition on burdening of an economic that of the Community institutions invested sector with extraneous risks and the dispropor- with public powers, which can only react to tionate nature of the levies such developments, but cannot in any way direct them. None the less, these factors must be regarded as influential factors inherent in the system of the common (a) Burdening of an economic sector with organization of the market. Both the price extraneous risks regulation mechanism with its system of refunds and levies and the rules which apply to trade with non-member countries constitute an integral part of the common 6 139. In the reservations which it expresses organization of the market in sugar. 1 regarding the validity of Regulation No 1914/87, the national court is obviously proceeding on the assumption that there exists in Community law a prohibition on burdening an agricultural sector with 141. Despite their effect of increasing costs, extraneous risks. That court understands an export refunds benefit the Community extraneous risk as consisting of factors market in sugar in so far as they form part which give rise to or increase costs which do of the price guarantees. Conditions on the not have their immediate origin in the internal market cannot be considered common organization of the market and in separately from developments on the world the conditions existing in the Common market. The common organization of the Market. It sees such an extraneous risk in market in sugar is itself based on the inter- the price level of sugar on the international dependencies which exist between those two market, a level which is essentially markets. determined by sugar production in non-member countries and the fall in the value of the US dollar. The low price level of sugar on the world market caused substantial export refunds to be paid and 142. Given these conditions, the question these in turn were responsible for the arises as to how a limit might be placed on budgetary deficit which had to be offset by the large volume of export refunds. If we the special elimination levy. proceed in this regard on the basis that price guarantees must be retained, the only appropriate method for consideration will be a reduction in the guaranteed quantities, that is to say, the A and B quotas. This once 140. It is unclear what legal basis exists for again demonstrates the mutual dependency the principle that price- forming factors and interconnection between regulatory within a common organization of the mechanisms in the common organization of market, such as in this instance the world market price or the fall in the value of the 61 — See Titles I and II of the basic regulation.

(b) Observance of the principle of proportionality 145. If we stan from this premiss, it is however essential that the financial charges arising from the system of price and sales guarantees should in some form fall also on 143. It is possible to discern a submission those market participants who, as subjects alleging a breach of the principle of propor­ of the common organization of the market, tionality only in so far as it is claimed that benefit from the regulation of that market. the financial charges resulting from the The level of charges deriving from the special elimination levy are unreasonable system cannot be criticized so long as there because of the amounts involved and the is an economic correlation between benefits fact that they are in addition to earlier and burdens. At most, one might criticize, levies. In order to decide the question on grounds of material justice and the whether the special elimination levy is prohibition of discrimination, a requirement disproportionate and consequently invalid it to make contributions with respect to has to be considered whether and to what budgetary deficits not caused by the extent the principle of self-financing in the production of the undertaking subjected to sector in question was properly introduced that requirement. and to what degree the special elimination levy is necessary and suitable for the attainment of that objective.

infringes the prohibition of discrimination under Article 28 of the basic regulation. under Article 40(3) of the EEC Treaty, in Since the amount of the special elimination the first place because it imposes different levy is determined simply by applying a charges on the production of A and B coefficient to the production levies due, the sugar, and secondly because a heavier special elimination levy is imposed on the burden is imposed on the German sugar production of A and B sugar in the same industry, which has a comparably high B ratio as are the production levies under quota, than is imposed on the sugar industry Article 28 of the basic regulation. of other Member States. Apart from the fact that comparable situations are involved, differences in the treatment of which cannot be justified on any objective grounds, the discrepancies in the charges imposed on A 150. In so far as the discrepancy in the and B sugar are in particular unlawful charges imposed on A and B sugar does not because the special elimination levy does not constitute unlawful discrimination, it is represent a charge for the regulation of the permissible to conclude that the special market, but is rather a financing charge, in elimination levy is equally non-discrimi­ respect of which the principle that persons natory in its effect. While it has to be subject to a charge should be treated equally admitted, when deciding whether the must a fortiori be observed. As early as the production of A sugar and that of B sugar fixing of the elimination levy under Regu­ represent comparable situations, that both lation No 934/86, referred to as a solidarity cases concern sugar and consequently the levy, the objective was to impose an same product, the same observation must equitable charge on all aspects of sugar also apply to C sugar. It is thus necessary to production and this ought a fortiori to have have regard not only to the product itself, been prescribed in the case of the special but also to its function within the common elimination levy. organization of the market. In this connection, it should be noted that the difference between A sugar and B sugar has a historical basis. As early as the first common organization of the market 148. Before I examine whether the special introduced by Regulation No 1009/67, 62 a elimination levy constitutes discrimination, I distinction was drawn between a 'basic would point out that, according to the views quota' and a 'maximum quota' for each expressed here, the special elimination levy undertaking and each marketing year. The is a measure designed to regulate the recitals in the preamble to that regulation market, which requires to be examined in state that: the context of the common organization of the market in sugar, and is not a purely financial charge.

depending on whether or not they exceed a (c) The sugar produced over and above the certain ceiling'. Quotas A and B, called "Sugar C " may not be disposed of on the internal market and must be exported in the natural state on the world market before 1 January following the end of This objective is implemented in Article 22 the sugar marketing year during which 6 et seq. of the regulation. This system, the it has been produced (Article 26).' 6 period of application of which had orig­ inally been limited to July 1975, was extended with a number of amendments 64 through Regulations No 3330/74 and No 65 152. That system was replaced, with effect 1592/80. from 1 June 1981, by Regulation No 1785/81, which is here referred to as the basic regulation. The terms Ά , B and C sugar', 'A quota' and 'B quota', were also incorporated, from the point of view of 151. During the period of validity of Regu­ terminology, the basic regulation. That lation No 3330/74, the Court described as regulation basically retained the system follows the quota system within the organ­ under which both A and B sugar could be ization of the market in sugar: marketed in the common market with the aid of price guarantees, although from the outset there was a possibility that an appreciably higher production levy would be charged in respect of B sugar. A conse­ '(a) In accordance with Article 24 each quence of the production levies is a undertaking is allotted a basic quota, 6 reduction in the guaranteed prices. 7 In called " Quota A" and may sell the contrast to a simple reduction in the inter­ sugar produced within that quota vention price, the system of production directly on the Community market at levies has the advantage that it takes the intervention price; account of Community interests, such as the principle of regional specialization.

has stated, against the background of a reason that a strangulatory levy was sugar market characterized by surplus imposed on the production of B sugar. production and in view of the function of production quotas, that 'all undertakings which exceed their A quota therefore produce, by definition, surpluses for 156. It should first be pointed out that the 68 export'. This analysis explains the recitals in the preamble to Regulation No considerably heavier charges imposed on 1914/87, and the general conception of that B-sugar production and the resultant regulation, indicate very clearly that it was restrictions placed on the special rules intended to cover the budgetary losses applying to its disposal within the common arising in the 1986/87 marketing year by organization of the market in sugar. means of the special elimination levy. The only question possible is therefore whether this was the only objective pursued and, if relevant, whether other objectives were 154. The above considerations justify the legally permissible. conclusion that A sugar and B sugar do not constitute the same product within the common organization of the market, with the result that it is not possible to speak of 157. It is not disputed that the practical comparable situations when examining the effect of the production levy is similar to problem of equal treatment. However, if 69 that of a reduction in price guarantees. In one none the less were to proceed on the so far as a heavier charge is imposed on basis that they are comparable, the grounds B sugar, the surplus production which already outlined are sufficient to justify the cannot be sold within the Community is different levels of charges imposed within charged in a purely theoretical manner. The the common organization of the market. As surplus lawfully produced under production already mentioned, this reasoning, in so far quotas is thus the essential cause of the high as it justifies a higher production levy in the budgetary deficit, since export refunds must case of B sugar, justifies in like degree the be paid when it is exported from the imposition of the special elimination levy. Community. The fact that it is much less attractive from an economic point of view to produce B-quota sugar than to produce A-quota sugar, in view of the higher charges (b) Misuse of powers imposed on surplus production, which may be theoretically defined as B sugar, is a lawful consequence of the method by which deficits are apportioned, which is intended to affect surplus production to a greater 155. This appears to be a suitable point at degree than sugar which can be disposed of which to examine the objection that the in the common market. special elimination levy is vitiated by misuse of powers. It is claimed that the true objective of the regulation is not to compensate for losses incurred during the 1986/87 marketing year, but rather to 158. This reasoning cannot be countered by dissuade sugar producers from all the argument that ultimately both A sugar production of B-quota sugar. It was for this and B sugar contribute to surplus production, that both benefit from the 68 — See Case 250/84, loc. cit., at paragraph 32 of the judgment. 69 — See Case 138/78, loc. cit., at paragraph 6 of the judgment.

159. Finally, the plaintiff in the main (d) Method of charging only in accordance proceedings argues that the special elimi­ with the example of the 'solidarity levy' nation levy is discriminatory and conse­ quently invalid on the ground that it imposes on the sugar industry a charge which varies in amount from one Member State to another. The discrepancy in the 161. It remains in this connection to average charge imposed is due solely to the examine the objection that the special elimi­ unequal apportionment of A and B quotas nation levy ought, if at all, to have been among Member States. Heavier charges are charged in the form of the imposition of the accordingly necessarily imposed on the solidarity levy under Regulation No 934/86, sugar industry in Member States which have that is to say, imposed in equal measure on a comparably higher B quota. If the A sugar and B sugar. Against this it should inequality in treatment objected to is not in be pointed out that even if one regards the fact based on the method of imposing the charges as being equivalent within the special elimination levy, but rather on the common organization of the market in allocation of production quotas determined sugar, their situations are still not identical. according to differing criteria, it cannot Whereas the solidarity levy, as is already merely for that reason be declared invalid. evident from its title, was designed to make good, on the basis of solidarity, a deficit built up over several years, the special elimi­ nation levy placed more emphasis on indi­ 160. The complaint of discrimination is ulti­ vidual responsibility in so far as it was mately an attack on the allocation of linked to production in the marketing year quotas, if it is accepted that the imposition during which the deficit had arisen. There of a higher charge on B sugar is permissible was therefore no obligation in law to choose in law. However, as the plaintiff in the main 70 — Judgment in Case 230 /78 Ersdania-Zuccherifict Nazionali 230/ proceedings itself stated, the allocation of ana Socteta Italiana per l'Industria degli Zuccheri v Minister quotas is in large measure the result of of Agriculture and Forestry and Others [19791979)) ECR 2749 2749,, at paragraph 17 et seq į also see Case 250/84, al political negotiations. Any assessment of the paragraph 11 et seq of the judgment.

the system for collecting the solidarity levy recently the Court confirmed that it is for the purposes of the special elimination bound, when safeguarding such rights, levy. to draw inspiration from constitutional traditions common to the Member States, and that it cannot therefore uphold Community measures which are incom­ 5. Protection of the right to own property and patible with fundamental rights recognized the freedom to pursue an economic activity 72 by the constitutions of those States. It has been recognized that the right to own property and the freedom to pursue a trade or profession rank among the general prin­ (a) Infringement of the right to own ciples of Community law. 73 As in the property constitutional systems of the Member States, those principles do not constitute an unfettered prerogative, 'but must be viewed 74 in the light of [their] social function'. 162. The plaintiff in the main proceedings disputes the validity of Regulation No 1914/87 on the ground that it infringes the fundamental right to own property and the 165. The Court outlined as follows the freedom to pursue economic activities. It criteria to be used when determining claims that the special elimination levy is whether there has been an unlawful strangulatory in nature, since it is imposed infringement of protected rights or whether on top of other financial charges. The total there has been a legitimate restriction on the burden placed on the plaintiff constitutes a exercise of personal rights: rights of this serious financial interference with the nature 'are protected by law subject always intrinsic value of the business established to the limitations laid down in accordance and pursued by it. The real-asset loss is at with the public interest. Within the the same time an interference with the Community legal order it likewise seems undertaking's competitive capacity. legitimate that these rights should, if necessary, be subject to certain limits justified by the overall objectives pursued by the Community, on condition that 163. The plaintiff claims that the amounts of the substance of these rights is left the levies imposed on the B quota will 75 untouched'. result in sugar-beet growers growing very little sugar beet, if indeed any at all, under their B quota. The resultant fall in supplies will prevent the proper utilization of the undertaking's capacity and inhibit its 166. The Court has also stated elsewhere economic recovery. that:

170. It was originally intended that the problem of surplus production should not be 167. If we apply those criteria to the facts of resolved by restrictions on production, i. e. a the present case, the question to be reduction in quotas. It was decided to answered amounts to asking whether the introduce the special elimination levy in special elimination levy can be justified by order to avoid, at least temporarily, the an objective pursued by the Community in need to adopt such a drastic measure. Even the common interest, and in particular if the amount of that levy rendered the whether it serves the recognized objectives production of B sugar uneconomical and of the common organization of the market, consequently resulted indirectly in a limi­ is not disproportionate to the objective tation on production, such a consequence pursued and does not encroach upon the would still not constitute an encroachment very substance of the freedoms protected. upon the substance of the right to own property. Even a reduction in production quotas imposed for reasons of market policy would be permissible, given that an under­ 168. I have already drawn attention to the taking 'cannot claim a vested right to the fact that the special elimination levy was maintenance of an advantage which it designed as a measure to implement the obtained from an organization of the principle of self-financing within the market in the form in which it existed at a 77 common organization of the market in given time'. sugar. It has also already been ascertained that the relatively high charge imposed on the production of B sugar is not dispropor­ tionate to the objective pursued, particularly (b) Interference with the freedom to in view of the fact that it is difficult to pursue an economic activity envisage a less drastic method for achieving that objective.

contrary, the production quotas remain the constitutional principles in question also same as before and as a result the marketing constitute general principles of law in the guarantee for the finished product, sugar, Community legal order. Only in that case continues to apply as previously. The only can they be used as a test of validity. In so ascertainable restriction lies in the resultant far as the plaintiff submits that the relevant limits imposed on the preferential regimes. principles of constitutional and adminis­ Such interference, however, still remains trative law, such as for example the within the bounds of a lawful regulation of principle of proportionality, the prohibition the exercise of a trade or business. Although of discrimination and the prohibition of the reduction in advantages may have retroactivity, are recognized as such in serious consequences for the operators Community law, it is necessary to point out affected, it cannot be considered as consti­ that those legal principles, as formulated in tuting an infringement of the fundamental Community law, have already been used as 78 right to pursue an economic activity. criteria for testing the regulation at issue.

I-510

ZUCKERFABRIK SÜDERDITHMARSCHEN AND ZUCKERFABRIK SOEST

C — Conclusions

On the basis of the foregoing considerations, I propose that the Court reply as follows to the questions referred to it by the national court:

(1) The second paragraph of Article 189 of the EEC Treaty must be interpreted as meaning that a court in a Member State which wishes to suspend by way of interim relief the effects of an administrative act based on a measure of Community law, on the ground that it has doubts as to the validity or the effectiveness of the measure of Community law on which the administrative act is based, is under an obligation to refer the question of the validity and effectiveness of the measure of Community law concerned to the Court of Justice.

The national court is bound by Community law with regard to the nature and scope of the suspension.