C-284/94

JUDGMENT OF 19. 11. 1998 — CASE C-284/94

J U D G M E N T O F T H E C O U R T (Sixth Chamber) 19 November 1998 *

In Case C-284/94,

Kingdom of Spain, represented by Alberto Navarro González, Director-General for Community Legal and Institutional Coordination, and Gloria Calvo Díaz, Abogado del Estado, of the State Legal Service, acting as Agents, with an address for service in Luxembourg at the Spanish Embassy, 4-6 Boulevard Emmanuel Servais,

applicant,

v

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SPAIN v COUNCIL

A P P L I C A T I O N for the annulment of Council Regulation (EC) N o 1921/94 of 25 July 1994 amending Regulation (EC) N o 519/94 on common rules for imports from certain third countries (OJ 1994 L 198, p. 1),

T H E C O U R T (Sixth Chamber),

composed of: P. J. G. Kapteyn, President of the Chamber, G. F. Mancini (Rap- porteur) and J. L. Murray, Judges,

Advocate General: P. Léger,

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JUDGMENT OF 19. 11. 1998 — CASE C-284/94

Relevant provisions and facts of the case

2 Before the entry into force of Council Regulation (EC) N o 519/94 of 7 March 1994 on common rules for imports from certain third countries and repealing Regula- tions (EEC) N o s 1765/82, 1766/82 and 3420/83 (OJ 1994 L 67, p. 89), as amended by the contested regulation, imports of products originating in State-trading coun- tries, including the People's Republic of China ('China'), were governed by several Council regulations.

3 In particular, Council Regulation (EEC) N o 1766/82 of 30 June 1982 on common rules for imports from the People's Republic of China (OJ 1982 L 195, p. 21) applied to imports which were not in principle subject to any quantitative restric- tions, whilst Council Regulation (EEC) N o 3420/83 of 14 November 1983 on import arrangements for products originating in State-trading countries, not lib- eralised at Community level (OJ 1983 L 346, p . 1), applied inter alia to imports from China which did not fall within the scope of Regulation N o 1766/82.

4 Under Article 2(1) of Regulation N o 3420/83, the putting into free circulation of the products listed in Annex III to that regulation, including certain toys from China, was subject to quantitative restrictions in one or more Member States as indicated in that annex. Article 3(1) provided that before 1 December of each year the Council was to lay down, in accordance with Article 113 of the EEC Treaty, the import quotas for those products to be opened by the Member States for the following year in respect of the various State-trading countries. Article 3(2) pro- vided that if no such decision had been adopted, the existing import quotas were to be extended on a provisional basis for the following year.

9 Regulation N o 519/94, applicable from 15 March 1994, repealed Regulations N o s 1766/82 and 3420/83. The first recital in the preamble to that regulation states that while 'the common commercial policy should be based on uniform principles', Regulations N o s 1766/82 and 3420/83 still allowed exceptions and derogations enabling Member States to continue applying national measures to imports of prod- ucts originating in State-trading countries. According to the fourth recital in the

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JUDGMENT OF 19. 11. 1998 — CASE C-284/94

preamble, 'in order to achieve greater uniformity in the rules for imports, it is nec- essary to eliminate the exceptions and derogations resulting from the remaining national commercial policy measures, and in particular the quantitative restrictions maintained by Member States under Regulation (EEC) N o 3420/83'. The fifth and sixth recitals state that the principle of liberalisation of imports must form the starting point for such harmonisation, except for 'a limited number of products originating in the People's Republic of China'. As explained in the sixth recital, 'owing to the sensitivity of certain sectors of Community industry', those products should be subject to quantitative quotas and surveillance measures applicable at Community level.

10 Article 1(2) of Regulation N o 519/94 provides that imports into the Community of the products referred to are to take place freely and so are not to be subject to any quantitative restrictions, without prejudice to any safeguard measures or the Community quotas referred to in Annex II. Article 1(3) provides that imports of the products referred to in Annex III are to be subject to Community surveillance. Annexes II and III apply exclusively to products from China.

1 4 The first two recitals in the preamble to the contested regulation state that, in adopting Regulation N o 519/94 and in setting the level of the quotas for certain products originating in China, the Council strove to find a balance between appro- priate protection of the sectors of the Community industry concerned and main- taining an acceptable level of trade with China, taking into account the various interests involved. With regard to the operation of the quota for toys falling within Code C N 9503 41, the third recital mentions disruptions occurring in trade with China which have affected Community economic sectors involved in the import, marketing and processing of those toys. In those circumstances and without preju- dice to a review of the situation, it seemed appropriate, as stated in the fourth recital, to increase the quota in question in order to ease the transition between the previous import regime and the regime established by Regulation N o 519/94.

15 In support of its application, the Spanish Government raises two pleas in law, one alleging failure to state adequate reasons for the contested regulation, and the other alleging breach of the principle of protection of legitimate expectations.

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JUDGMENT OF 19. 11. 1998 — CASE C-284/94

Failure to state adequate reasons

16 In the first place, the Spanish Government claims that the contested regulation is contrary to Article 190 of the E C Treaty in that it does not contain an adequate statement of the reasons on which it was based.

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SPAIN v COUNCIL

21 So far as concerns the legal context of the contested regulation, the Spanish Govern- ment observes that the quota in issue was introduced by Regulation N o 519/94 as part of a vast programme intended to harmonise the commercial rules applying to trade with State-trading countries, on account of 'the sensitivity of certain sectors of Community industry' (sixth recital in the preamble to that regulation). The level of that quota was set having regard to the trend reflecting an exponential increase in imports of Chinese toys and the state of the Community market.

22 In the Spanish Government's view, in the contested regulation the Council raised the quota in question by 28.64% just four months after the entry into force of Regulation N o 519/94 without giving adequate reasons for that increase. In par- ticular, the amendments made do not appear to be justified by any changes in the circumstances which led to the fixing of the original quota.

23 The contested regulation thus introduced a significant alteration but did not provide any reasons not only to identify the factors which led to the adoption of the mea- sure but also to explain its effect, so as to enable the persons concerned to defend their rights and the Court to exercise its power of review. The reference in the third recital in the preamble to 'disruptions ... in trade with the People's Republic of China' is, in the applicant's view, no more than a factual observation insufficient to justify the manner in which the institution exercises the wide discretion it enjoys (see Compagnia Italiana Alcool v Commission, cited above).

27 Furthermore, although no specific detailed reasons were given for the choice made in respect of the products subject to quota, the chief matters of law and fact on which the regulation is based and the reasons which led the Council to adopt it were set out clearly and unequivocally in the preamble to the contested regulation.

28 In that connection, the Court, as the Council was right to point out, has consis- tently held (since its judgment in Case 5/67 Beus v Hauptzollamt München [1968] E C R 83, at p . 95) that the extent of the requirement to state reasons depends on the nature of the measure in question, and that in the case of measures intended to have general application the preamble may be limited to indicating the general situ- ation which led to its adoption, on the one hand, and the general objectives which it is intended to achieve, on the other.

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SPAIN v COUNCIL

29 It follows that the case-law cited by the Spanish Government, which relates to Commission decisions of individual concern to the applicants, is irrelevant in the case of measures of general application such as the contested regulation.

30 Furthermore, the Court has repeatedly held that if the contested measure clearly discloses the essential objective pursued by the institution, it would be excessive to require a specific statement of reasons for the various technical choices made (see, inter alia, Case 250/84 Eridania and Others v Cassa Conguaglio Zucchero [1986] ECR 117, paragraph 38).

35 Second, since the Council had explained the objectives pursued, it was not required to justify the technical choices made, in particular the size of the increase in the contested quota.

36 It follows that the first plea in law must be rejected.

Breach of the principle of protection of legitimate expectations

37 In the second place, the Spanish Government claims that, in adopting the contested regulation, the Council acted in breach of the principle of protection of legitimate expectations, inasmuch as it failed to take into account the situation of the Member States and of the traders concerned. While there was no change in the actual cir- cumstances, an alteration in the status quo established by the earlier regulation was imposed on the traders at very short notice, even though it was not justified by a higher public interest. That resulted in serious damage to all the traders who, having regard to the former regulation, had terminated or postponed their contracts.

38 The Spanish Government considers itself entitled to plead a breach of the legitimate expectations of the traders concerned, in particular the Spanish traders, in an action for annulment, especially in view of the fact that the interested parties could not in the circumstances bring such an action themselves.

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41 For its part, the Commission argues that while a prudent and reasonable trader is capable of foreseeing the adoption of a Community measure likely to affect his interests, he cannot plead a breach of the principle of protection of legitimate expec- tations when that measure is adopted. In this case, the Spanish Government's asser- tions with regard to the breach of legitimate expectations are not based on any evidence, not even prima facie evidence. In any event, there was nothing that would have led a prudent and reasonable trader to believe that the Council would not alter the quota. In addition, both the Spanish authorities and the traders in that sector played a very active part in the process of drafting both Regulation N o 519/94 and the contested regulation, which meant that they were aware, well in advance, of the

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content of those regulations. Finally, Regulation N o 519/94 made express provi- sion not only for quantitative quotas to be introduced but also for them to be altered, so as to enable them to be adjusted at regular intervals in Une with the changing economic situation. Consequently, it was known that the quotas set might be adjusted, or even abolished, and such action was foreseeable.

« It must be stated at the outset that, although the Spanish Government alleges that the contested regulation adversely affects the legitimate expectations of the Member States as well, in all essential respects its arguments refer to breach of the legitimate expectations of the traders concerned. Nevertheless, despite the doubts expressed by the Council, there is nothing to prevent a Member State from claiming in an action for annulment that an act of the institutions frustrates the legitimate expecta- tions of particular individuals (see, in this respect, Case 278/84 Germany v Com- mission [1987] E C R 1, paragraphs 34 to 36; Case 203/86 Spain v Council [1988] E C R 4563, paragraphs 17 to 20, and Case C-169/95 Spain v Council [1997] E C R I-135, paragraphs 49 to 54).

Costs

47 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs, if they have been applied for in the successful party's pleadings. Since the Kingdom of Spain has been unsuccessful, it must be ordered to pay the costs, in keeping with the form of order sought by the Council. Under Article 69(4) of the Rules of Procedure, the Member States and institutions which intervene in the proceedings are to bear their own costs.

O n those grounds,

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

hereby:

1) Dismisses the application;

R. Grass P. J. G. Kapteyn

Registrar President of the Sixth Chamber

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