C-136/93

TRANSAFRICA v COMMISSION

OPINION OF ADVOCATE GENERAL VAN GERVEN delivered on 24 March 1994

Mr President, 1 January 1986. ' In the relevant sector, Members of the Court, namely the maize sector, accession led to the traditional trade between Spain and the United States ceasing, to the detriment of both former trading partners. The United States lost a market and Spain lost a source of cheap supply.

1. The questions referred to you for a pre- liminary ruling both relate to the concept of force majeure in connection with agriculture. May a Council regulation adopting measures to implement an agreement between the EEC and the United States of America and In order to avoid serious disruption to the amending the market conditions for an agri- markets of the two countries, the Commu- cultural product (first question) or the con- nity took special measures in relation to each clusion of the agreement itself, in so far as of them: it negotiated with the United States it may entail a subsequent change in the within the framework of GATT and adopted market conditions (second question), be specific regulations for the benefit of Spanish regarded as a case of force majeure which traders. releases a trader from the obligations he entered into on the basis of an earlier regula- tion with a view to obtaining subsidies at the time when the product in question was placed in free circulation?

3. The negotiations between the Commu- nity and the United States under GATT Article XXIV.6 took place principally during 1986 and culminated in the signing of an The relevant legislation agreement on 30 January 1987, 2 by which the Community undertook, inter alia, for the years 1987 to 1990, to ensure an annual

level of imports of 2 million metric tonnes of adopted Regulation (EEC) N o 1799/87 on maize into Spain. The Agreement was 25 June 1987 6 which is referred to in the announced in the press shortly after it was national court's first question, and which concluded but was not published in the provides for a reduction in the levy on Official Journal of the European Communi- imports into Spain of maize originating in ties until April 1987. third countries for the period 1987 to 1990. Implementing Regulation (EEC) No 2059/87 7 was adopted by the Commission on 13 July 1987. Those measures took effect on the day the regulations were published in 4. In 1986, in the course of the negotiations, the Official Journal of the European Com- the Community authorities had to take a munities. number of provisional measures. In particu- lar, after an interim solution was found on 1 July 1986 between the Community and the United States, the Council adopted, on 16 September 1986, Council Regulation (EEC) N o 2913/86 3 introducing a deroga- tion to Regulation (EEC) N o 2727/75 * and providing that if American exports of maize into Spain fell significantly, a reduced levy could be fixed for imports of maize from third countries. Those measures were of lim- 6. While the negotiations with the United ited duration (until 28 February 1987) and States were going on, market conditions for subject to specific monitoring of imports maize in Spain were characterized by very into Spain of products from the United high prices owing largely to a poor harvest. States. Pursuant to that regulation, the Com- The Commission considered the difficulties mission adopted, on 15 October 1986, Regu- to be sufficiently serious to justify the intro- lation (EEC) N o 3140/86 5 organizing an duction of transitional measures aimed at invitation to tender for quantities of maize lowering the price of maize, and on originating in third countries which could be subject to a reduced import levy. Those mea- 26 November 1986 it adopted, pursuant to sures also ended on 28 February 1987. Article 90 of the Accession Treaty, Regula- tion (EEC) N o 3593/86 8 which forms the background to the main proceedings before the national court. Under that regulation a subsidy is granted for the import of maize into Spain. Half of the quantities imported 5. Following the conclusion of the final originated in third countries and half origi- Agreement under the GATT, the Council nated in Member States with the exception

of Portugal. The subsidy for imports from 8. Transáfrica considered that the conclusion third countries was to be a fixed amount to of the Agreement of 30 January be deducted from the levy to be paid (second 1987 between the Community and the subparagraph of Article 1(1)). The measures United States had brought about a funda- which were described as 'transitional' were mental and unforeseeable change in the situ- expressly justified by the high prices due in ation by causing a sudden drop in prices and, particular to a poor harvest (first recital in on 16 February 1987, it informed SENPA, the preamble) and were of limited duration: that there was no point in importing subsi- only quantities of maize released for free cir- dized maize and requested the release of the culation in Spain until 31 May 1987 qualified security which had been given. Having con- for the subsidy (Article 1(3)). Furthermore, sulted the Commission, SENPA, by a deci- the regulation laid down the maximum sion of 14 September 1987, refused to release quantities that could qualify for the subsidy: the security. An initial request made b y 600 000 tonnes from third countries and Transáfrica was refused by the Minister for 600 000 tonnes from the Member States with Agriculture on 6 September 1988, and Tran- the exception of Portugal (Article 1(2)). sáfrica then brought court proceedings o n 11 November 1988 before the Audiencia Nacional (National High Court). By order of 23 March 1993, the Chamber for Conten- tious Administrative Proceedings of that court referred the following questions to the Court of Justice for a preliminary ruling: The proceedings before the national court

United States of America and the out- bent upon him whereas in the other, the con- come of the GATT negotiations in the cept serves to impose an obligation on a early months of 1987 on the undertak- third party for the benefit of an individual. ing concerning annual imports of maize In the case oí force majeure, account is taken and sorghum during the period 1987 to of an unforeseeable change in the initial cir- 1990, even before they were enshrined cumstances (an event was not or could not in written provisions, result in unavoid- reasonably have been foreseen), whereas in able and unforeseeable consequences to the case of the protection of legitimate the extent of making compliance with a expectations, reliance is placed on an expec- primary requirement impossible or dif- tation derived from the conduct of a third ficult, constituting a case of force party in circumstances such as to create a majeure which can be relied on for the right for the benefit of an individual (the purposes of Article 22 of Commission conduct of a third party was such that the Regulation (EEC) N o 2220/85 of individual was entitled to expect a relatively 22 July 1985? precise outcome).

Submissions based on the protection of legitimate expectations

intervention measures in markets. It allows the consequences of accession in the maize Community authorities a wide discretion in sector by introducing a transitional period: that respect and interprets very strictly the Council Regulation (EEC) N o 2913/86 1 2 conduct of the prudent and informed trader, referred to an interim solution found on that bonus pater familias of Community law. 1 July 1986, and, moreover, probably antici- It has consistently been held that, whilst the pated the fairly imminent conclusion of a principle of the protection of legitimate final agreement by providing that the mea- expectations is one of the fundamental prin- sures were to expire on 28 February 1987. ciples of the Community, traders cannot Furthermore, Commission Regulation have a legitimate expectation that an existing (EEC) N o 3593/86 13 was expressly justified situation which is capable of being altered by on the ground of the high price of maize due the Community institutions in the exercise in particular to a poor harvest. The measures of their discretion will be maintained. 9 The adopted by that regulation were described as Court has held that this is particularly true 'transitional'; they were of strictly limited in an area such as the common organization duration and related only to specific quanti- of the markets whose purpose involves con- ties of maize. Any trader would realize that stant adjustments to meet changes in the eco- conditions were changing on simply reading nomic situation, and applies all the more the regulations. forcefully where the benefit in question is the result of special arrangements which depart from the normal rules of the market and were adopted in order to deal with exceptional circumstances. 10

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OPINION OF MR VAN GERVEN — CASE C-136/93

Nacional, which comes from the same source 15. In conclusion, there is nothing to suggest (SENPA) as the one produced by the Com- that traders' expectations, had they existed mission in this C o u r t 1 5 but covers a shorter and were they legitimate, could have been period, shows that the price of maize was infringed either by the Agreement concluded continually falling during December between the EEC and the United States on 1986 and January, February and March 1987. 30 January 1987, by the announcement of It is particularly clear from the graph p r o - that Agreement made at the beginning of duced by the Commission, which covers the February or by Regulation N o 1799/87 of period from July 1986 to June 1988, that it 25 June 1987 laying down measures for the was from October 1986 that the price of implementation of that Agreement. maize started to fall, that is precisely from the adoption of Regulation N o 3593/86, which was designed to bring about a fall in prices. The fall in prices in February 1987 was therefore not sudden. It was merely the foreseeable and desired logical The submissions based on force majeure result of the measures adopted in October 1986 and not a sudden market reaction to the Agreement concluded between the EEC and the United States.

— for which the application was not 18. On several occasions, the Court has held accepted or where the primary require- that in the sphere of agricultural regulations, ment has been fulfilled, the concept oí force majeure is not limited to the absolute impossibility of carrying out the obligation entered into. It has however con- sistently held that the concept must be understood in the sense of abnormal and unforeseeable circumstances, outside the — released for free circulation in Spain dur- control of the trader concerned, the conse- ing the period of validity of the docu- quences of which, in spite of the exercise of ment referred to in Article 3 and on sub- all due care, could not have been avoided mission of this document to the authority except at the cost of excessive sacrifice. I8 In which issued it within two months of the the present case, those conditions were not date on which it expires. satisfied.

articles submitted by the applicant to the 21. Was it absolutely impossible for Transá- national court make it clear that any reason- frica to release the subsidized maize into free ably well-informed trader could have real- circulation? I think not. The goods were ized that the question of imports of maize available. Clearly the operation had become into Spain was one of the major issues in the less rewarding, economically speaking. negotiations between the E E C and the However, that is a commercial risk and not a United States. The applicant knew, or ought case of force majeure. Traders have to make to have known, that an agreement was neces- certain choices and bear the consequences, sary in order to avoid a trade war between namely the profits or the losses which flow the Community and the United States of from those choices. Transáfrica chose to buy America. a large quantity of subsidized maize under the conditions set out in Regulation N o 3593/86 and it should have known, since it was written in the regulation itself, that that was a transitional measure, applying for a 20. The applicant claims that the fall in limited time and to limited quantities which prices, caused by the announcement of the Agreement, made it impossible or extremely met a specific need and was designed to difficult for it to fulfil its obligation to release bring about a fall in prices. Although Transá- the subsidized maize into free circulation. frica received its import papers for Whilst I agree that the price of maize did fall 125 000 tonnes on 10 December 1986, it also at that time, I am satisfied from the evidence chose to import only 31 587 tonnes and to presented in the context of the submissions wait before importing the rest. Although the regarding legitimate expectations that that price was particularly low in February and fall in prices was not a sudden and unfore- the announcement of the Agreement seeable reaction to the announcement of the between the Community and the United Agreement of 30 January 1987 between the States gave rise to the likelihood of a subse- Community and the United States, but quent, even greater fall, that was only the rather the foreseeable and desired logical materialization of an ordinary commercial result of the measures adopted in October risk and not an event constituting force 1986. majeure.

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