C-298/96

and

Bundesanstalt für Landwirtschaft und Ernährung,

on the principles of Community law applicable to measures taken by national authorities for the recovery of an unduly paid Community subsidy,

* Language of the case: German.

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OELMÜHLE AND SCHMIDT SÖHNE ν BUNDESANSTALT FÜR LANDWIRTSCHAFT UND ERNÄHRUNG

— the Commission of the European Communities, by Klaus-Dieter Borchardt, of its Legal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Oelmiihle Hamburg AG and Jb. Schmidt Söhne G m b H & Co. KG, represented by Jürgen Gründisch, of the German Gov- ernment, represented by Claus-Dieter Quassowski, Regierungsdirektor in the Fed- eral Ministry of Economic Affairs, acting as Agent, and of the Commission, rep- resented by Klaus-Dieter Borchardt, at the hearing on 9 October 1997,

after hearing the Opinion of the Advocate General at the sitting on 4 December 1997,

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JUDGMENT OF 16. 7. 1998 — CASE C-298/96

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OELMÜHLE AND SCHMIDT SÖHNE ν BUNDESANSTALT FÜR LANDWIRTSCHAFT UND ERNÄHRUNG

4 The principles governing the grant of that subsidy were, at the time of the events giving rise to the dispute in the main proceedings, laid down in Council Regu- lation (EEC) N o 1594/83 of 14 June 1983 on the subsidy for oil seeds (OJ 1983 L 163, p. 44) and Commission Regulation (EEC) N o 2681/83 of 21 September 1983 laying down detailed rules for the application of the subsidy system for oil seeds (OJ 1983 L 266, p. 1).

5 In order to ensure that the subsidy is granted only for seeds which qualify for it, Article 4 of Regulation N o 1594/83, as amended by Council Regulation (EEC) N o 935/86 of 25 March 1986 (OJ 1986 L 87, p. 5), introduced a two-part Community certificate, one part of which was intended to provide proof that the seeds har- vested in the Community had been identified at an oil mill or a feed mill (the part designated 'ID'), and the other part of which was intended to certify, where such was the case, that the amount of the subsidy had been fixed in advance (the part designated 'AP').

6 In accordance with Article 3 of Regulation N o 1594/83, as amended by Regulation N o 935/86, the procedure for 'identification' of seeds is entrusted to the competent agency of the Member State to which the application for the subsidy is made.

7 Entitlement to and payment of the subsidy are governed by Article 10 of that regulation, as amended, which provides:

— in the case of the seeds referred to in 1(a), when proof of processing is fur- nished,

— in the case of the seeds referred to in 1(b), when proof of incorporation is furnished.

>

8 The subsidy in question is equal to the difference between the target price in force for a species of seed and the world market price. In accordance with Article 33(1) of Regulation N o 2681/83, it is fixed by the Commission 'whenever the market situation makes it necessary and in such a way as to ensure its being applied at least once a week'.

9 Accordingly, the Commission first fixes the 'gross' subsidy in ECU. Next, that amount is converted into the national currencies and increased or reduced by a corrective amount (the 'definitive' subsidy) and, finally, subject to the spot and for- ward exchange rates of the E C U into national currencies, the amount is converted into the currency of the Member State in which the seeds have been processed, if other than the State in which they were harvested. Thus the subsidy varies from one State to another, depending on the Member States' currency situation.

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1 4 In the second case, Schmidt appears to have acquired a quantity of colza between 1984 and 1986, part of which was supplied to it direct by a previous purchaser.

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JUDGMENT OF 16. 7. 1998 — CASE C-298/96

15 O n the basis of information supplied by Schmidt, stating that the colza had been harvested in Germany, the BLE issued ID certificates for colza of German origin and granted the relevant subsidy by seven decisions adopted between November 1984 and January 1987.

16 Following an investigation of the previous purchaser, the customs authorities con- cluded that part of the subsidised colza had been imported from France. The BLE therefore cancelled the ID certificates issued to Schmidt and the decisions granting the subsidy, and demanded repayment of the subsidy.

17 Following the rejection on 3 June 1991 of its complaint against the BLE's decision, by application of 25 June 1991 Schmidt, too, brought an action before the Verwal- tungsgericht Frankfurt am Main. First, it denies that the colza was of French ori- gin. Second, it claims that part of the enrichment it received has been lost, since the fact is that it passed on the pecuniary advantage it had received to its suppliers by paying the target price, and that its rights of action against them are virtually worthless, both because the time-limits have expired and because the suppliers are insolvent.

21 Those were the circumstances in which the Verwaltungsgericht Frankfurt am Main stayed proceedings and referred the following question to the Court for a prelimi­ nary ruling:

'Is it compatible with Community law for German domestic law to preclude the recovery of subsidies unduly paid for the processing of colza where the recipient, who was unaware of the facts giving rise to the illegality of the notice of grant and whose ignorance thereof did not result from gross negligence (Paragraph 48(2), seventh sentence, as it was, now Paragraph 49a(2), second sentence, of the Verwal­ tungsverfahrensgesetz (Law on Administrative Procedure)), is able to rely, pursu­ ant to Paragraph 48(2), sixth sentence, of that Law (Paragraph 49a(2) of the new version) in conjunction with Paragraph 818(3) of the Bürgerliches Gesetzbuch (Civil Code), on the loss of enrichment, where the enrichment would normally be held to be lost if the recipient had already, at the time when the subsidy was

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JUDGMENT OF 16. 7. 1998 — CASE C-298/96

granted, passed on the pecuniary advantage resulting from it by paying the target price provided for under Community legislation and has obtained no right of recourse, or merely a worthless right of recourse, against the supplier of the pro- cessed colza?'

22 By that question, the national court is in substance asking whether it is contrary to Community law for domestic legislation to permit unduly paid Community sub- sidies not to be recovered, on the basis, assuming that the recipient's good faith is established, of criteria such as loss of enrichment, where the recipient had already, at the time when the subsidy was granted, passed on the pecuniary advantage resulting from it by paying the target price provided for under Community legisla- tion and any right of recourse against his suppliers would be worthless.

domestic law, subject to the limits imposed by Community law, on the basis that the rules and procedures laid down by domestic law must not have the effect of making it practically impossible or excessively difficult to implement the Commu- nity rules and that the national legislation must be applied in a manner which is not discriminatory as compared to procedures for deciding similar national dis- putes (see, in particular, Deutsche Milchkontor-, paragraph 19, and Case C-366/95 Landbrugsministeriet ν Steff-Houlberg Export and Others [1998] E C R I-2661, paragraph 15, and, as regards national procedural law, Case C-312/93 Peterbroeck [1995] E C R I-4599, paragraph 12, and Joined Cases C-430/93 and C-431/93 Van Schijndel and Van Veen [1995] E C R I-4705, paragraph 17). If domestic law requires the various interests in question, namely, on the one hand, the public interest in the revocation of an unlawful administrative measure and, on the other, the protection of the legitimate expectation of the person to whom it is addressed, to be weighed against one another before the measure is revoked, the interests of the Community must be taken fully into account {Deutsche Milchkontor, para­ graph 32).

25 In that judgment the Court ruled, in the light of those factors, that Community law does not prevent the domestic legislation concerned from having regard, in barring the recovery of unduly paid Community subsidies, to criteria such as loss of the unjust enrichment.

26 According to the plaintiffs in the main proceedings, in the circumstances of the case their plea of lost enrichment satisfies the conditions laid down by the Court. The interests of the Community could be only very slightly affected, since the objective of the common agricultural policy measure, that is to say the granting of subsidies to producers of oil seeds harvested and processed within the Community, was in substance achieved when the oil mills passed on the subsidy to the produc­ ers or suppliers through the purchase price. Repayment is still less justified in view of the fact that the oil mills divide the subsidies between the various oil-seed pro­ ducers on behalf of the Community. They should not therefore have to bear risks which in reality are a matter for the Community.

30 In the present case it should be pointed out that there is no provision of Commu- nity law governing the recovery of subsidies where they were paid on the basis of documents subsequently shown to be inaccurate. In that regard, it should be noted in particular that Regulations N o 136/66, N o 1594/83 and N o 2681/83 make no

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OELMÜHLE AND SCHMIDT SÖHNE ν BUNDESANSTALT FÜR LANDWIRTSCHAFT UND ERNÄHRUNG

reference to recovery. Accordingly, if a trader draws up and submits a declaration with a view to obtaining a subsidy, the mere fact of having drawn up that docu- ment cannot deprive him of the right to plead his good faith when the declaration is based exclusively on information which was provided by third parties. It is, however, for the national court to consider whether certain factors should not, in the circumstances, have caused the trader to check the accuracy of this infor- mation.

31 Should the national court decide that the oil mills acted in good faith, it would not be contrary to Community law to take into consideration the plea of loss of unjust enrichment. Since that principle also forms part of the Community legal system, it cannot be considered contrary to Community law for domestic legislation to apply that principle in a field such as that of recovery of unduly paid Community sub- sidies.

32 As for the fact that the recipient of a subsidy had already, at the time when it was granted, passed on the pecuniary advantage resulting from it by paying the target price to the producer, it should be noted, as the Advocate General observed at point 44 of his Opinion, that this is a particularity of the Community scheme set up to provide for subsidies in the sphere of oil-seed processing, and the effects of any malfunctioning of that scheme are not to be borne by the processing undertak- ings.

37 I n t h a t regard, it is sufficient t o state that that finding, w h i c h w a s m a d e in t h e context of Article 93 of t h e E C Treaty, c a n n o t b e t r a n s p o s e d t o recovery of u n d u l y paid Community subsidies. As the Advocate General has shown in points 47 to 51 of his Opinion, the two situations are not comparable; in particular, the competi­ tive advantage given to national undertakings, which is a feature of State aid, does not exist in the context of Community aid under the common agricultural policy.

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38 In view of the foregoing, the answer to the question referred to the Court must be that Community law does not in principle preclude national legislation from allowing recovery of unduly paid Community subsidies to be barred, on the basis of criteria such as loss of the enrichment, where:

— the recipient of the subsidy had already, at the time when it was granted, passed on the pecuniary advantage resulting from it by paying the producer the target price prescribed by Community law, and

— any right or recourse against his suppliers is worthless.

JUDGMENT OF 16. 7. 1998 — CASE C-298/96

O n those grounds,

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

in answer to the question referred to it by the Verwaltungsgericht Frankfurt am Main by order of 27 August 1996, hereby rules:

Community law does not in principle preclude national legislation from allow- ing recovery of unduly paid Community subsidies to be barred, on the basis of criteria such as loss of the enrichment, where:

— the recipient of the subsidy had already, at the time when it was granted, passed on the pecuniary advantage resulting from it by paying the producer the target price prescribed by Community law, and

Gulmann Wathelet Edward

Jann Sevón

Delivered in open court in Luxembourg on 16 July 1998.

R. Grass C. Gulmann

Registrar President of the Fifth Chamber

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