C-366/95

2. The facts of the case which have given rise to the questions submitted for examination by the Court are, briefly stated, as follows. In this particular case, the amount of the refund was determined by reference to the percentage of beef included in the composi­ tion of the product, on the basis of the dec­ larations made by the defendants themselves at the time of their application. Laboratory The defendants in the main proceedings are checks carried out in the Middle East in 1989 Danish undertakings operating in the beef revealed, however, that the 'ground beef' in trade. During the period from 1985 to 1989 respect of which the person concerned they acquired considerable quantities of had received an export refund in actual fact 'ground beef' from Slagtergården Bindslev contained pork. Following this discovery, the A/S (hereinafter 'Slagtergården') in order to export it to Arab countries. At the time of export the defendants requested and obtained from the competent Danish 2 — These were Article 18 of Council Regulation (EEC) No 805/68 of 27 Tunc 1968 on the common organisation of the authorities, in pursuance of the relevant market in beef and veal (OJ, English Special Edition 1968 (I), p. 187); Article 6 of Council Regulation (EEC) No 885/68 of 28 June 1968 laying down general rules for granting export refunds on beef and veal ana criteria forfixingthe amount of such refunds (OJ, English Special Edition 1968 (1), p. 237), and Commission Regulation (EEC) No 1315/84 of 11 May * Original language: Italian. 1984 fixing the export refunds on beef and veal (OJ 1984 1 — Joined Cases 205/82 to 215/82 [1983) ECR 2633. L 125, p. 38).

— the reason for the undue payment of the aid being exceptional circumstances in The court making the reference, which was the form of serious fraud and punishable called upon to rule on the appeal lodged by offences on the part of a third party; and the Danish Ministry of Agriculture, referred the following questions to the Court for a preliminary ruling:

— the fact that — as the exporter undertak­ '1 . A. Do the Community law principles ings were aware — the monitoring auth­ which result from the case-law of the Court ority exercised day-to-day supervision

I - 2664

LANDBRUGSMINISTERIET v STEFF-HOULBERG EXPORT AND OTHERS

I - 2665

OPINION OF MR LA PERGOLA — CASE C-366/95

— the price of finished products of equiva­ Commission, the German Government and lent type and description was the same the French Government, whilst proposing from producers in Denmark and those differing solutions on the merits of the case, abroad? are unanimous in considering that the spe­ cific criterion of the obligation to repay is not governed by Community rules. In their view, the recovery of sums paid but not due only came to be governed by uniform rules with the adoption of Commission Regu­ lation (EC) No 2945/94 of 2 December 3. May a third party, including an aid recipi­ 3 1994, which is not however applicable to ent, rely on possible negligence on the part the facts of the case. In accordance with the of the monitoring authority with the result Deutsche Milchkontor case-law, therefore, that demands for reimbursement of refunds the action pending before the national court already paid would be excluded on the basis should be governed exclusively by the rel­ of an overall assessment of the case?' evant provisions of national law, given that, as the Court stated in that judgment, 'the rules and procedures laid down by national law must not have the effect of making it vir­ tually impossible to implement Community regulations and national legislation must be The first question applied in a manner which is not discrimina­ tory compared to procedures for deciding 4 similar but purely national disputes'.

3. The purpose of the first question is in substance to ascertain whether, in the context of legal proceedings to recover Community aid paid but not due, a court may take into account, in order to exclude the obligation to demand repayment, certain special circum­ stances which apply in the case concerned and which Danish law takes into consider­ ation in the context of rules governing simi­ However, I cannot endorse that view. Good lar demands for reimbursement of purely faith here must be regarded as the subjective national origin. state of the recipient, that is to say, lack of awareness of the undue nature of the benefit received. That said, in this particular case, it is a matter of ascertaining whether the

obligation to demand repayment is defined exporter is paid an amount designed to com­ in objective terms by the legal system, pensate for any difference there may be namely whether the obligation stems exclu- between the Community price and the price sivelyfrom the objective circumstance that charged on other markets: the amount paid the sum received was not due or whether it by the authority granting the refund is is dependent upon an additional condition, adjusted exclusively by reference to the of a so-to-speak subjective nature, linked to amount of that difference, and the exporter's the recipient's awareness of the undue nature right to the refund can only be asserted in of the aid received. In other words, it is a relation to it. The purpose of the system we matter of ascertaining whether the rules con­ are looking at here is as follows: refunds cerning the subjective aspect of the obliga­ unduly received must be repaid and, where tion to make restitution derive from the they have been granted in advance, the Community's own legal system or whether recipient is required to lodge a deposit in 7 it is necessary to have recourse to the rel­ order to guarantee repayment. Such reim­ evant provisions of national law. I, for ray bursement is due in any case, irrespective of part, feel that I must draw from the body of any finding concerning the subjective state of Community rules preceding Regulation No the recipient. Repayment does not constitute 2945/94 the conclusion that the recovery of a penalty for any unlawful behaviour, but export refunds has always been independent simply involves reimbursement of an amount 5 of any subjective condition. It is true that which lacks any objective justification. It the Community rules on the reimbursement strikes me as significant, moreover, that even of refunds paid but not due did not expressly when the goods do not arrive, due to force provide for the case of an exporter who has majeure, at the destination declared in the received undue sums in good faith. However, application but are exported to a place for that omission does not constitute a lacuna in which a lower refund was provided, the the system now under consideration. On the exporter concerned is none the less required contrary, it reflects the specific choice of the to reimburse the difference between the Community legislature not to attach any amount received and that which he could importance to the subjective element in an legitimately claim. The Court recently clari­ action for recovery. This conclusion, more­ fied this point in the judgment in the case of over, tics in with the rationale behind the Anglo Irish Beef Processors International and export refund. As the Court has pointed out Others, stating that the recipient is not 6 in other cases, that system derives from a entitled, even in a case of force majeure, to 8 desire to promote the sale of Community keep the entire sum paid in advance. products on world markets. To that end, an

In conclusion, the Community legislature order for reference, be able to plead his good has defined the reimbursement of refunds faith to avoid the obligation to repay the paid but not due as an objective obligation refunds. In this connection, it is sufficient to which merely involves restitution, irrespec­ consider that the mistake which the exporter tive of any criterion of fault or responsibility concerned claims to have made without any of the part of the person who is bound by negligence on his part relates to the composi­ that obligation. As the Court said in the tion of the products in respect of which the 9 Piange judgment, 'the grant of the refund refund was paid. As regards the grant of aid, constitutes an advantage for the trader which it is the exporter who must state in his dec­ is justified if certain conditions concerning laration '(a) a description of the products in the characteristics of the product exported accordance with the nomenclature used for and the method of exportation are fulfilled. refunds; (b) the net mass of the products or, When checks reveal that that has not been where applicable, the unit of measurement to the case, the refund is not due to the exporter be taken into account in calculating the and it must be repaid if it has already been refund; and, (c) in so far as is necessary for received ... It is not ... necessary in order to calculating the refund, particulars of the com- claim repayment that the trader should have position of the products or the relevant refer­ 10 been guilty of fraud or of mistakes attribut- ence'. able to fault on his part'.

unaware of the true composition of the behaviour by a third party, the producer, in goods: what matters is that he ought to have which the exporter himself had no hand at known. all. As the Court stated in this connection on another occasion, 11 'the exporter's good faith and the fact that he did not take part in the fraud cannot be taken into account'. The explanation for this approach in the case-law, confirmed on many occasions, lies in the fact that the right to obtain the refund is linked to strictly objective criteria: 'the good faith of the exporter' — as Advocate General Gul- mann observed in his Opinion in the Boter- 12 lux case — 'is immaterial in that regard. It The defendant undertakings in the main pro­ is the exporter who is responsible for the ceedings contend, however, that the recipi­ conditions being met and, in principle there­ ents of the aid were in this case commercial fore, it is the exporter who must bear the undertakings. The fraud, they maintain, was risk of non-compliance with those condi­ committed by the producer and it would be tions'; that explains why the Court has excessive to claim that an exporter, who had always considered that any fraudulent no opportunity of checking the quality of behaviour on the part of a third party 'rep­ the goods, should carry out detailed labora­ resents an ordinary commercial risk' in the tory tests in order to establish the truth of context of 'contractual relations entered into the declarations submitted to the authorities. on the occasion of an exporter applying for a Yet this argument is not convincing. The 13 refund'. As the Court held in its judgment benefit of the refund is given to the exporter 1 in the Theodorakis case, 4it is for the person and is granted on the basis of his declara­ concerned, 'who is fully at liberty to select tions. I do not therefore see who else should such trading partners as his interests in that guarantee the truth of the statements submit­ respect may dictate, to take the appropriate ted to the authorities. It does not strike me precautions either by including the requisite as unreasonable or excessive that the risk clauses in the contract in question or by involved in the possible inaccuracy of the effecting appropriate insurance'. In the case statements should be borne by the person of fraudulent behaviour on the part of a making the declaration who is, moreover, the recipient of the aid. trading partner, an exporter cannot therefore claim that he should be allowed to keep the refund to which he was not entitled; the most he can do is to claim before the national court the contractual or non­ contractual protection which he is afforded

6. Still in the context of the first question referred for a preliminary ruling, the national court also asks the Court of Justice whether the reimbursement of aid paid but not due can be excluded under the principle, laid down by national law, that recovery would harm the legitimate expectations of the recipient of the aid. The answer, in the light It is difficult to see what expectation the per­ of the information contained in the order for son concerned could have entertained in this reference, must be in the negative. To begin particular case. In that connection, the find­ with, it should be pointed out that protec­ ing that expectations are only worthy of pro­ tion of legitimate expectations, according to tection provided they are legitimate seems to established case-law, is one of the general 15 me to be decisive, that is to say, a recipient principles of Community law. In the case must, without any negligence on his part, of actions for recovery based on Community have relied on the lawfulness of the aid, even law, therefore, it is the principle laid down if it was only apparent. In other words, by that law which applies and not the corre­ Community law provides protection for sponding principle laid down by the various expectations only in the absence of negli­ national legal systems. That solution makes it gence. The Court has on several occasions possible to avoid differences of treatment reiterated the principle with regard to State under the law, in all cases which should in aid that expectations as to the lawfulness of principle be subject to the same rules. aid are justified only if the aid has been granted in accordance with the procedure laid down in Article 93 of the Treaty, inas­ much as 'a diligent businessman should nor­ mally be able to determine whether that pro­ 17 cedure has been followed'. I consider that in this respect the case-law expresses a prin­ ciple of general application regarding legiti­ That said, I should like to observe that the mate expectations and therefore provides a Court has recently held that the rules apply­ decisive key to resolving this particular case. ing in the matter of export refunds 'cannot The rationale underlying these cases is that give rise to any legitimate expectations other than entitlement to a refund subject to the

the recipient is required, in keeping with the finding any irregularities is equally unlikely general duty of care, to ensure that the to give rise to legitimate expectations. Whilst procedure under which he has been given the acknowledging that the authority failed in its aid is lawful. No legitimate expectation can obligation to carry out the necessary checks therefore have been aroused where the aid is with due care, it is sufficient to point out that illegal as a result of an infringement of the Court has repeatedly stated that 'a prac­ procedural rules, which constitutes an easily tice of a Member State which does not con­ verifiable defect, ignorance of which is not a form to Community rules may never give defence. rise to a legitimate expectation on the part of a trader who has benefited from the situation 18 thus created'. The supervisory duty incumbent on Member States — as the 19 Court stated in the Corman judgment — 'is owed to the Community and ... only the Community authorities may act upon any In this particular case, the exporters have no breach of such duty. The supervision exer­ expectations worthy of protection for the cised in this connection has neither the aim simple reason that the illegality of the aid nor the effect of discharging the successful relates to circumstances which the persons tenderer in any way whatever from his concerned were not aware of but of which responsibilities arising from the tender'. The they should none the less have been aware. point of that judgment is that the exercise of This seems to me to be a point which is supervision by Member States does not beyond dispute. It is apparent from the order relieve the exporter of the obligation to for reference that the exporters received check that his declarations are correct: the undue refunds because they had declared purpose of the supervision is not to provide that they were exporting goods with a beef the traders concerned with any certainty that content higher than that which was actually the products meet the conditions laid down present in the product. It is quite possible for granting an export refund. In other that they were not aware of the real compo­ words, it does not provide a 'guarantee' for sition of the product; the fact remains, how­ exporters. It is therefore impossible for the ever, that they could and should have been latter to entertain legitimate expectations on aware of it. It is therefore impossible for the the basis of the conduct of the supervisory exporters to rely on the absence of negli­ authorities. gence in pleading lack of awareness of mat­ ters which they were under a duty to declare; that duty, needless to say, must clearly be construed as an obligation to provide correct declarations, with the result that the risk of any errors falls on those actually making the declarations.

The second question

9. The third question raised by the national court relates to the consequences arising 8. The above considerations make it pos­ from the failure of the authorities to carry sible, in my view, to answer the second ques­ out checks on the export transactions in tion as well. In formulating the question, the question with due care. I have already national court starts from the premiss that a answered this point, however: the exporter recipient in good faith is not obliged to cannot rely on any negligence on the part of repay sums unduly received and asks the the supervisory authority in order to evade Court for details regarding the concept of his obligation to repay refunds unduly good faith. In particular, it asks whether or received. If such negligence has caused him not, in circumstances such as those of this economic damage, he can at most seek com­ case, the recipient can be regarded as acting pensation from the authorities for the dam­ in good faith and hence be exempted from age sustained, provided of course that the the obligation to reimburse refunds paid but conditions laid down under national law are not due. For the reasons set out above, how­ met in order to be able effectively to bring a ever, the exporter is in any case required to claim for compensation.

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LANDBRUGSMINISTERIET v STEFF-HOULBERG EXPORT AND OTHERS

Conclusion

10. In the light of the foregoing, I propose that the Court should reply to the ques­ tions referred by the Højesteret as follows: