C-324/96

Athanasia Simou and Others,

on the validity of Council Regulation (EEC) N o 1114/88 of 25 April 1988 amend- ing Regulation (EEC) N o 727/70 on the common organisation of the market in raw tobacco (OJ 1988 L 110, p. 35), Council Regulation (EEC) N o 1251/89 of 3 May 1989 amending Regulation (EEC) N o 727/70 (OJ 1989 L 129, p. 16), Council Regulation (EEC) N o 1252/89 of 3 May 1989 fixing, for the 1989 harvest, the norm and intervention prices and the premiums granted to purchasers of leaf tobacco, the derived intervention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amending Regu- lations (EEC) N o 1577/86, (EEC) N o 1975/87 and (EEC) N o 2268/88 (OJ 1989 L 129, p . 17), and of Commission Regulation (EEC) N o 2046/90 of 18 July 1990 determining, for tobacco from the 1989 harvest, the quantity actually produced and the prices and premiums payable under the system of maximum guaranteed

* Language of the case: Greek.

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quantities (OJ 1990 L 187, p. 23), as well as on the interpretation of the second paragraph of clause 8 of the cultivation contract set out in the annex to Commis- sion Regulation (EEC) N o 4263/88 of 21 December 1988 amending Regulation (EEC) N o 1726/70 on the procedure for granting the premium for leaf tobacco (OJ 1988 L 376, p. 34),

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— the Council of the European Union, by J. Carbery, Legal Adviser, and M. Vit- sentzatos, of its Legal Service, acting as Agents,

— the Commission of the European Communities, by M. Condou-Durande, of its Legal Service, acting as Agent,

having regard to the Report for the Hearing,

after hearing the oral observations of Odette Nikou Petridi Anonymos Kapnem- boriki AE, represented by N . Vassilakakis, E. Vassilakakis and E. Pallioudi; the Greek Government, represented by P. Mylonopoulos and F. Dedousi, Legal Executive within the State Legal Council, acting as Agent; the Council, repre- sented by J. Carbery and M. Vitsentzatos; and the Commission, represented by M. Condou-Durande, at the hearing on 17 July 1997,

prices and the premiums granted to purchasers of leaf tobacco, the derived inter- vention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amending Regulations (EEC) N o 1577/86, (EEC) N o 1975/87 and (EEC) N o 2268/88 (OJ 1989 L 129, p. 17), and of Com- mission Regulation (EEC) N o 2046/90 of 18 July 1990 determining, for tobacco from the 1989 harvest, the quantity actually produced and the prices and premi- ums payable under the system of maximum guaranteed quantities (OJ 1990 L 187, p. 23), as well as on the interpretation of the second paragraph of clause 8 of the cultivation contract set out in the annex to Commission Regulation (EEC) N o 4263/88 of 21 December 1988 amending Regulation (EEC) N o 1726/70 on the procedure for granting the premium for leaf tobacco (OJ 1988 L 376, p. 34).

2 Those questions have arisen in proceedings between Odette Nikou Petridi Anony- mos Kapnemboriki AE ('Petridi') and 16 tobacco producers, Athanasia Simou and Others ('Simou and Others'), following the reduction, pursuant to Regulation N o 2046/90, in the premium paid for the Tsebelia variety on the basis of the maxi- mum guaranteed quantities ('MGQs') set by Regulations N o s 1114/88, 1251/89 and 1252/89.

The applicable legislation

3 Regulation (EEC) N o 727/70 of the Council of 21 April 1970 on the common organisation of the market in raw tobacco (OJ, English Special Edition 1970 (I), p. 206) established a system for supporting producers based on norm and interven- tion prices fixed annually by the Council for Community leaf tobacco.

Without prejudice to Articles 12a and 13, for each 1% by which the maximum guaranteed quantity is exceeded per variety or group of varieties, the intervention prices and the premiums concerned shall suffer a reduction of 1%. A correction corresponding to the reduction of the premium shall be applied to the norm price of the harvest in question.

The reductions referred to in the second subparagraph shall not exceed 5% for the 1988 harvest and 15% for the 1989 and 1990 harvests.

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For the purposes of applying this paragraph, the Commission shall establish before 31 July whether production exceeds the maximum guaranteed quantity for a vari- ety or group of varieties.

...'

'The Council, acting as indicated in Article 43(2) of the Treaty, shall lay down every year, for each tobacco variety or group of varieties produced in the C o m - munity for which prices and premiums are fixed, a maximum guaranteed quantity for the following year's harvest, taking into account the market situation and the socio-economic and agricultural situation in the areas concerned. The Council shall set the maximum guaranteed quantities for the 1990 harvest at the same time as for the 1989 harvest. The overall maximum quantity for the Community is set for each of the 1988, 1989 and 1990 harvests at 385 000 tonnes of leaf tobacco.'

8 Article 2 of Regulation N o 1251/89 provided that it would enter into force on the third day following that of its publication in the Official Journal of the European Communities. Since it was published on 11 May 1989, Regulation N o 1251/89 entered into force on 14 May 1989.

9 Regulation N o 1252/89 allocates, for each variety or group of varieties, the overall M G Q fixed at 385 000 tonnes by Regulation N o 1114/88 for the 1989 tobacco har- vest throughout the Community.

10 Annexes IV and V to Regulation N o 1252/89 lay down the prices, premiums and M G Q s for the different varieties harvested, inter alia, in 1989. The M G Q s for the Tsebelia and Mavra varieties were thereby fixed at 30 000 tonnes.

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PETRIDI v SIMOU AND OTHERS

15 Those contracts were based on payment to Petridi of a Community premium, which, when the contracts were concluded, amounted to E C U 2.593 per kilogram of tobacco. Petridi was required to pass on a large portion of that premium to Simou and Others in so far as it had to pay them a price which was at least equal to the intervention price of E C U 2.396 per kilogram of tobacco.

16 In accordance with the model European cultivation contract set out in the annex to Regulation N o 4263/88, a clause relating to renegotiation of the contract price between the purchaser and vendor in the event of a reduction in the prices or pre- mium was included in those contracts.

17 In May 1990 Petridi paid to Simou and Others the full price agreed for tobacco of the Tsebelia variety from the 1989 harvest specified in the above contracts and received the corresponding premium.

18 As is already clear from paragraph 13 of the present judgment, the Commission, in Regulation N o 2046/90, found subsequent to the harvest that the M G Q of 30 000 tonnes fixed for the Tsebelia and Mavra varieties had been exceeded by a total of 44.1% and accordingly reduced the premium initially granted by 15%. Petridi was thereupon requested by the National Tobacco Agency to repay 15% of the pre- mium which it had received.

19 O n 26 November 1993 Petridi instituted proceedings against Simou and Others seeking an order requiring them to pay to it various amounts set out in its applica- tion by reason of the 15% reduction in the premium paid for the Tsebelia variety pursuant to the M G Q s set by Regulations N o s 1114/88, 1251/89, 1252/89 and 2046/90.

23 In the present case, the national court notes that Regulation N o 1251/89 is designed to ensure that the Council fixes M G Q s one year prior to the harvest in question in order to allow planting to be planned. This was not the case with regard to the 1989 harvest since Regulation N o 1252/89, fixing the M G Q s accord- ing to variety or group of varieties for that harvest, was adopted on the same day as Regulation N o 1251/89, namely 3 May 1989, and published on 11 May 1989.

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24 Since Simou and Others had, not only on 11 May 1989 but even on 3 May 1989, already planted tobacco of the Tsebelia variety for the 1989 harvest, the national court is unable to see how the objective of Regulation N o 1251/89, namely the planning of planting, could have been achieved. The national court also points out that, in Greece, the European cultivation contracts, applied for the first time for the 1989 harvest, were signed late, in July 1989, after the tobacco producers had already planted the tobacco in question.

25 Since its decision is not open to appeal under national law, the Irinodikio, Echinos, considers that it is obliged to refer the matter to the Court for a preliminary rul- ing. From the judgment making the reference it can be ascertained that the national court raises five questions, which may be framed as follows:

1. Is Council Regulation N o 1114/88 amending Regulation N o 727/70 valid, inas- much as it provides that, in the event of the maximum guaranteed quantity for the production of leaf tobacco in the whole of the Community being exceeded, the intervention prices and premiums are to be reduced, generally and without distinction, and irrespective of whether the producer did or did not exceed the quantity provided for?

5. Finally, in the event that the Court of Justice should rule that the regulations in question are valid, who is ultimately liable to repay the amount by which the premium has been reduced?

26 By those five questions, the national court is asking the Court to rule on the valid- ity of Regulations N o s 1114/88, 1251/89, 1252/89 and 2046/90 and on the inter- pretation of the second paragraph of clause 8 of the cultivation contract set out in the annex to Regulation N o 4263/88. In particular, the national court is seeking to ascertain, by its third and fifth questions, on the assumption that the regulations in issue are valid, who is required to repay the amounts corresponding to the reduc- tion in the prices and premium decided on pursuant to Article 4(5) of Regulation N o 727/70, as amended, and whether the second paragraph of clause 8 of the cul- tivation contract set out in the annex to Regulation N o 4263/88 allows, in such a case, the contract price to be renegotiated in line with the reduction in the prices and premium.

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The validity of Regulation N o 1114/88

27 The national court first asks whether Regulation N o 1114/88 is valid in so far as it fixes overall M G Q s and provides for a general reduction in prices and premium if those M G Q s are exceeded, irrespective of the production volume of each producer and without distinguishing between the different tobacco varieties.

31 As the Court pointed out in paragraph 34 of Crispoltoni II, pursuing the sole objective of ensuring a fair standard of living for producers and processors of raw tobacco, in particular by increasing their individual earnings, would involve a seri- ous risk of rendering impossible, in a market characterised by excess production, the realisation of the objective of stabilising the market in raw tobacco pursued through the introduction of the M G Q system by Regulation N o 1114/88, in accordance with one of the objectives of the common agricultural policy set out in Article 39 of the Treaty.

32 The Court accordingly concluded, in paragraph 30 of the judgment in Crispoltoni II, that Regulation N o 1114/88 was not incompatible with the objectives of the common agricultural policy set out in Article 39 of the Treaty.

33 Second, the Court took the view, in paragraph 47 of Crispoltoni II, that, in adopt- ing Regulation N o 1114/88, the Council had acted not only in compliance with the principle of proportionality, in that it did not choose a measure which was mani- festly inappropriate having regard to the objective pursued, but also in accordance with the need to effect the appropriate adjustments by degrees prescribed by Article 39(2)(b) of the Treaty.

34 When the Council adopted Regulation N o 1114/88 it was, as the Court pointed out in paragraph 46, entitled to consider, without making any manifest error of assessment, that the M G Q system was less onerous for tobacco growers than an individual quota system, since under the former the production of those concerned

37 By a second question, the national court asks whether Regulations N o s 1251/89 and 1252/89 are invalid inasmuch as they fix the M G Q s for the 1989 harvest of Tsebelia tobacco, on the ground that they infringe the principles of non- retroactivity, protection of legitimate expectations and legal certainty.

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38 In this regard, Petridi and the Greek Government, referring to the judgment in Crispoltoni I, point out that Regulation N o 1252/89 fixing the prices, premiums and M G Q s according to varieties for the 1989 harvest was adopted on 3 May 1989 and published on 11 May 1989, whereas the selection of tobacco plants takes place in October of the preceding year and the transplanting of those tobacco varieties in the fields is carried out no later than the beginning of April in view of the favour- able climatic conditions obtaining in Southern Greece where these varieties are grown. Consequently, when Regulation N o 1252/89 was published, it was no longer possible to programme investments and overproduction of tobacco was inevitable.

39 Petridi and the Greek Government also criticise the fixing of the entry into force of Regulation N o 1251/89, establishing the principle that M G Q s for each variety should be fixed one year in advance, on 14 May 1989, that is to say, three days after Regulation N o 1252/89 allocating the M G Q s for the 1989 harvest had come into force on 11 May 1989. In thus fixing the dates on which those two regulations entered into force, the Council, they claim, exceeded the limits of its discretion. In any event, the Council failed to give proper reasons for the choice of those dates by relying, in Regulation N o 1251/89, on the need to allow for planting to be planned.

42 In paragraph 17 of that judgment, the Court first pointed out that, although in general the principle of legal certainty precludes a Community measure from tak- ing effect from a point in time before its publication, it may exceptionally be oth- erwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected.

43 The Court went on to point out, in paragraph 18 of that judgment, that, by estab- lishing a system of M G Q s , Regulation N o 1114/88 sought to curb any increase in the Community's tobacco production and at the same time to discourage the growing of varieties that are difficult to dispose of. Such a purpose, the Court stated, could not be achieved, with respect to the 1988 harvest of Bright variety tobacco, by the regulations published at the end of April and July of that year.

44 The Court accordingly concluded, in paragraphs 20 and 21 of the judgment in Crispoltoni I, that Regulations N o s 1114/88 and 2268/88 could not be regarded as having retroactive effect in so far as the purpose to be achieved by those regula- tions did not so demand. The Court also held that those regulations had infringed the legitimate expectations of the traders concerned. Although those traders must have seen as foreseeable measures to limit any increase in production of varieties which were difficult to dispose of, they were entitled to expect that they would be notified in good time of any measures having effects on their investments. That, however, had not been the case.

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so It follows that the fixing, by Regulation N o 1252/89, of the M G Q for the 1989 harvest of the Mavra and Tsebelia varieties was not unforeseeable for the traders concerned, who must have anticipated that the M G Q for the Mavra and Tsebelia varieties would be further reduced for the 1989 harvest. Their legitimate expecta- tions were therefore respected.

51 Furthermore, as prudent and well-informed traders, the producers in question could not, under any circumstances, plan a 1989 production exceeding the 1988 M G Q . As is clear from Regulation N o 2046/90, actual production of tobacco of the Mavra and Tsebelia varieties increased to 43 236 tonnes. In thus exceeding by 40.1% in the 1989 harvest the M G Q fixed for the 1988 harvest, producers of tobacco of the Mavra and Tsebelia varieties therefore clearly did not behave as pru- dent and well-informed traders.

52 As the Council and Commission point out, overproduction of the Mavra and Tse- belia varieties during the 1989 harvest was such that, even though the M G Q for those varieties had remained unchanged, the decision imposing the maximum 15% reduction in the prices and premium was inevitable.

53 Moreover, it should be remembered that, by introducing the M G Q system, Regu- lation N o 1114/88 sought to Umit Community tobacco production to a quantity corresponding to an overall M G Q of 385 000 tonnes envisaged for each of the 1989, 1990 and 1991 harvests and to discourage production of varieties, such as Mavra and Tsebelia, which were difficult to dispose of. Such objectives, in particu- lar the compliance with the overall M G Q of 385 000 tonnes fixed for the 1989 harvest, made it necessary for Regulation N o 1252/89 to fix, even retroactively, a M G Q for the 1989 harvest of the Mavra and Tsebelia varieties.

57 Furthermore, according to Article 2, Regulation N o 1251/89 entered into force on 14 May 1989, that is to say, three days after Regulation N o 1252/89 fixing the M G Q s for the 1989 and 1990 harvests.

58 It thus follows from the first recital in the preamble and from Article 2 of Regulation N o 1251/89 that, according to the Council, the principle of fixing the M G Q s according to varieties one year before the harvest, introduced by Regulation N o 1252/89, was to be applied only prospectively, and for the first time in the 1990 harvest.

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59 The argument put forward by the Greek Government, to the effect that the Coun- cil applied Regulation N o 1251/89 retroactively, cannot therefore be accepted.

60 In those circumstances, it does not appear that, by fixing the entry into force of Regulation N o 1251/89 at a date later than that of the entry into force of Regu- lation N o 1252/89, in such a way that the principle of fixing M G Q s according to varieties one year prior to the harvest applied for the first time only to the 1990 harvest, the Council exceeded the broad discretion which it enjoys in matters relat- ing to the common agricultural policy or that it gave improper reasons for its choice.

the producers on the basis of whether the M G Q s by varieties fixed by Regulation N o 1252/89 had or had not been exceeded and consequently reduce by 15% the prices and premium after having ascertained that the M G Q fixed for the 1989 har- vest of the Tsebelia and Mavra varieties had been exceeded by an overall amount of 44.1%.

64 In those circumstances, the answer to be given to the national court must be that consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Regulation N o 2046/90.

The interpretation of Regulation N o 4263/88

65 By a fourth question, the national court seeks to ascertain, in the event that the regulations in question are valid, who is required to repay the amounts corre- sponding to the reduction in the prices and premium decided on pursuant to Article 4(5) of Regulation N o 727/70, as amended, and whether the second para- graph of clause 8 of the cultivation contract set out in the annex to Regulation N o 4263/88 allows the contract price, in such a case, to be renegotiated in line with the reduction in the prices and premium.

66 It should first be borne in mind that Regulation N o 4263/88 specifies the manda- tory minimum terms of the European cultivation contract concluded between a tobacco producer and a tobacco processor with effect from the 1989 harvest and sets out, in annex form, a standard European cultivation contract consisting of 14 mandatory clauses. These include clause 8, which provides inter alia that 'if the prices or the premium for the tobacco variety indicated in paragraph 1 are adjusted by a Community Regulation, the purchaser and the vendor shall renegotiate the contract price. Where those prices or premiums are adjusted pursuant to Article 4(5) of Regulation (EEC) N o 727/70, the contract price shall be adjusted in line with the change in the price and premiums'.

70 Such a renegotiation of the contract price following a reduction in the premium is consistent with the fact that, as pointed out in paragraph 35 of the present judg- ment, in a system of M G Q s , all Community producers must together bear equally the consequences of the decisions which the Community institutions are led to adopt in order to respond to the risk of an imbalance which may arise on the mar- ket between production and outlets.

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71 The reply to the national court must therefore be that, although a processing undertaking is required to repay the amounts corresponding to the reduction in prices and the premium decided on pursuant to Article 4(5) of Regulation N o 727/70, as amended, the second paragraph of clause 8 of the cultivation con- tract set out in the annex to Regulation N o 4263/88 allows, in such a case, the contract price to be renegotiated between the processing undertaking and the tobacco producers in line with the reduction in the prices and premium.

Costs

72 The costs incurred by the Greek Government, the Council of the European Union and the Commission of the European Communities, which have submitted obser- vations to the Court, are not recoverable. Since these proceedings are, for the par- ties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

2. Consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Council Regulation (EEC) N o 1251/89 of 3 May 1989 amending Regulation N o 727/70 and of Council Regulation (EEC) N o 1252/89 of 3 May 1989 fixing, for the 1989 harvest, the norm and inter- vention prices and the premiums granted to purchasers of leaf tobacco, the derived intervention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amending Regulations (EEC) N o 1577/86, (EEC) N o 1975/87 and (EEC) N o 2268/88.

3. Consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Commission Regulation (EEC) N o 2046/90 of 18 July 1990 determining, for tobacco from the 1989 harvest, the quantity actually produced and the prices and premiums payable under the system of maxi- mum guaranteed quantities.

4. Although a processing undertaking is required to repay the amounts corre- sponding to the reduction in prices and the premium decided on pursuant to Article 4(5) of Regulation N o 727/70, as amended, the second paragraph of clause 8 of the cultivation contract set out in the annex to Regulation N o 4263/88 allows, in such a case, the contract price to be renegotiated between the processing undertaking and the tobacco producers in line with the reduction in the prices and premium.

Gulmann Moitinho de Almeida Edward

Puissochet Jann

Delivered in open court in Luxembourg on 26 March 1998.