C-240/97

4. Regulation (EEC) No 804/68 of the — ESP 518 290 080 in respect of export Council of 27 June 1968 establishes a refunds for butter, common organisation of the market in milk and milk products. 2

* Original language: French. 1 — OJ 1997 L 139, p. 30. 2 — OJ English Special Edition, 1968 (I), p. 176.

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5. In the version applicable to these pro- 8. Article 8(1) of Regulation No 729/70 ceedings,3 Article 17(1) provides that, to provides: the extent necessary to enable the products governed by the regulation, including but- ter, to be exported on the basis of the prices for those products in international trade, the difference between those prices and prices in the Community may be covered 'The Member States in accordance with by an export refund. national provisions laid down by law, regulation or administrative action shall take the measures necessary to:

Regulation (EEC) No 729/70 — satisfy themselves that transactions financed by the Fund are actually carried out and are executed correctly;

Regulation (EEC) No 3665/87 (a) where there is serious doubt as to the true destination of a product,

1 1 . Commission Regulation (EEC) No 3665/87 of 27 November 1987 lays or down common detailed rules for the appli- cation of the system of export refunds on agricultural products. 6

(b) where, by reason of the difference between the amount of the refund on the exported product and the amount 12. Article 4(1) of that regulation provides of the import duties applicable to an that the refund is to be paid only upon identical product on the date of accep- proof being furnished that the products for tance of the export declaration, it is which the export declaration was accepted possible that the product may be rein- have, within 60 days from the date of troduced into the Community. acceptance, left the customs territory of the Community in the unaltered state.

5 — OJ 1980 L 62, p. 5. 6 — OJ 1987 L 351, p. 1.

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15. Council Regulation (EEC) No 595/91 of 4 March 1991 concerns irregularities and the recovery of sums wrongly paid in connection with the financing of the com- For the purposes of this article, "inquiry" mon agricultural policy and the organisa- shall be taken to mean any inspection, tion of an information system in that field. 7 verification or action carried out by offi- cials of the national administration with a view to establishing whether there has been an irregularity, with the exception of action carried out at the request or under the 16. Article 5(2) of that regulation provides: direct authority of a court.' 'Where a Member State considers that an amount cannot be totally recovered, or cannot be expected to be totally recovered, it shall inform the Commission, in a special notification, of the amount not recovered and the reasons why the amount should, in 18. The first subparagraph of Article 6(2) states: 'The Member State shall, as soon as 7 — OJ 1991 L 67, p. 11. This regulation repeals Regulation No 283/72 of the Council of 7 February 1972 (OJ 1972 possible, communicate to the Commission L 36, p. 1). the inquiry findings.'

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22. On 3 June and 8 July 1992, Quesos Frías submitted three requests for advance export refunds to the competent authority, 26. Following negotiations conducted at Servicio Nacional de Productos Agrarios, 9 the same time, Quesos Frías concluded a which were accompanied by a guarantee sale contract on 24 November 1992 with for 120% of their amount and were the French company Union Commerciale conditional upon actual export of the pour l'Europe et l'Afrique in respect of butter to a non-member country. 1 050 tonnes of butter for the price of USD 1 185 per tonne FOB Bilbao, 10 to be marketed in Algeria. 8 — Cost Insurance Freight: the sale price thus includes, in addition to the price of the goods, the cost of carriage and insurance. 9 — National Agricultural Products Department, hereinafter 10 — Free on board: the sale price does not include carriage and 'Senpa'. insurance costs.

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27. Performance of the contract was 32. The butter was then carried by the assigned to the English company, Com- vessel Maere from Skikda to Limassol magric UK,11whose registered office is in (Cyprus), arriving on 22 February 1993. London. It was placed in storage in the Limassol and Larnaka refrigerated bonded warehouses.

28. On 21 December 1992, the 1 550 tonnes of butter were shipped at Bilbao 33. On 18 June 1993, the goods were aboard the vessel Maere, chartered by the shipped aboard the vessel Reefer Sea at French company Unshipping SARL, whose Limassol, bound for Kaliningrad, after the registered office is in Paris. 1 550 tonnes of butter had been sold to the Swedish company Handelshuset Redline AP, acting as intermediary for export of the goods to Russia, the final consignee being Prodintorg.

37. In its view, the quality of the butter when it left Spain is evidenced by the veterinarian certificates, the certificates issued by the external health department 41. The Commission states that its doubts and the fact that it was held in refrigerated derive from the following facts: storage at the Bilbao bonded warehouse, and by the certificate drawn up by SGS Española de Control SA, a company responsible for the checking and verifica- tion of international commercial transac- tions (hereinafter 'SGS'), in particular. It — the poor quality of the goods, dating was also proved, on arrival of the goods, by back to the shipment thereof in Spain, the official certificates issued by the Rus- prevented unloading in Algeria; sian authorities.

38. The Kingdom of Spain considers that — the goods finally sold in Russia are not the Commission, for its part, has produced the same as those which gave rise to no evidence such as to establish that the payment of the advance export butter was of poor quality when shipped in refunds; Spain.

39. The Commission points out that, under — the low price finally agreed upon is, Regulation No 729/70, the financing of moreover, lower than the minimum export refunds is subject to compliance price laid down in international agree-

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ments and than the price initially dom of Spain produced no specific relevant agreed with the purchaser. evidence such as to undermine that view.

47. It is clear from Articles 4(1) and (5)(1) of Regulation No 565/80 that payment of the refunds is subject to proof that the goods left the customs territory of the 44. It considers that the Kingdom of Spain Community in the unaltered state for did not discharge its obligation under importation into a non-member country. Article 8 of Regulation No 729/70 to check the various operations at issue and to recover refunds improperly received by 12 — Fourth recital in the preamble to Regulation No 804/68. the beneficiary. It explains that the King- 13 — Ibid., sixth recital, Article 1(c), and Article 17(1).

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48. Under Article 13 of Regulation Bilbao to Kaliningrad, it is appropriate to No 3665/87, the export refund can be review the settled case-law of the Court granted only if the butter was of sound concerning the rules of evidence regarding and fair marketable quality. financing of the common agricultural pol- icy.

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54. In this case, the Commission contends 58. On 21 December 1992, at the request that the butter sold by Quesos Frías and of Commagric, SGS issued two certificates shipped aboard the Maere in the port of to the effect that the consignments of butter Bilbao did not meet the quality conditions conformed with the Algerian compliance laid down in Article 13 of Regulation rules for imported products. 20 No 3665/87 either at the time of export or on arrival at its destination.

59. Doubt has been cast on the scope of those checks, however, by reason of a number of factors. 55. As regards the quality of the butter on leaving Bilbao, the following points are noteworthy, since, as the Commission points out, they give the impression that the goods, even before being exported, did not meet the criteria laid down by the 60. On 17 December 1992, the Spanish relevant provisions for the grant of an veterinary authorities issued an official export refund. certificate to the effect that the butter:

— met the prescribed quality standards 56. After being placed in the Bilbao bonded for export, warehouse on 28 May 1992, the butter, loaded aboard the Maere, left the port of Bilbao on 24 December 1992. Between those two dates, several examinations or inspections were carried out, the conclu- sions of which are contradictory. — was of sound quality,

— was less than six months old, 57. On 18 November 1992, the butter was examined by the Carlos III Health Institute of the Spanish Ministry of Health and Consumer Affairs, which concluded that the butter was fit for human consump- tion. 19 — was fit for consumption.

66. After the arrival of the Maere at Skikda on 29 December 1992, the Algerian veter- inary inspector at the frontier post made the following observations: 'Presence of 63. The record of agreement dated 3 Feb- abnormal stains (black and red) and rancid ruary 1993, drawn up with the involvement taste: unloading of the product disal- of all the parties, in so far as it was signed lowed'. 23 by Commagric and Quesos Frías, also shows that Commagric had expressed reservations as to the quality of the butter when the goods were shipped aboard the Maere in Bilbao. 22 Those reservations, the existence of which is not disputed by the 67. A record drawn up on 2 January 1993 Spanish Government, which, however, on board the vessel, signed by experts regards them as a pretext for cancelling representing the shipowner, the charterer the operation on grounds related to diffi- and the consignee of the goods and by the culties of marketing the butter on Algerian master of the vessel, shows that it was territory, nevertheless justified an inquiry found that, in hold No 1, a number of being carried out as to the exact condition boxes, on being opened, contained butter with dark stains on the area exposed and

21 — Annex 7 to the defence. 22 — Annex 9 to the application, record of agreement, p. 2. 23 — Annex 7 to the defence.

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that a rancid odour was noticeable. contaminated. Finally, the presence of con- According to the report, no leakage of taminating and caseolytic bacteria was water was observed. 24 noted in hold No 4.

73. It submits that, during shipment and 69. The visual and organoleptic examina- after the departure of the Maere from tion showed that the goods aboard the Bilbao, Commagric indicated that it was vessel were giving off a rancid odour (very reluctant to proceed with the operation, strong in hold no 1, distinctly noticeable in essentially because of difficulties of market- holds Nos 2 and 3, very slight in hold ing the butter in Algeria. The political No 4), had a rancid taste (holds Nos 2 and instability in that country and the pressure 3) or were very slightly oxydated (hold brought to bear by the Algerian buyer to No 4) and displayed varying numbers of prevent independent marketing of butter by stains of varying intensity (numerous stains public undertakings were the reasons for and black spots in hold No 1, slightly dark which the Algerian authorities prevented stains of limited extent in hold No 3). unloading of the goods.

74. As regards the inspection of 2 January 70. The chemical analyses disclosed high 1993, the Kingdom of Spain states that levels of acid and peroxides, accounting for only hold No 1 was inspected, that the the rancid taste in holds Nos 2 and 3. The origin, dimensions and characteristics of microbiological analyses confirmed the the stains appearing on certain boxes were presence of very extensive mould in hold not described in detail, that it had been No 1, the other three holds being less found that the packages were in good condition and that no trace of any leak had been observed. It adds that no repre- 24 — Annex 14 to the defence. sentative of Quesos Frías had been allowed 25 — Annex 7 to the defence. to attend when the Algerian veterinary

80. That fact is particularly important since it is clear from a letter from the Spanish 76. Each of those points should be exam- customs authorities dated 17 September ined. 1993 26 that Quesos Frías claimed that a small part of the cargo had been damaged in transit. Whether or not the cause of the damage was determined, those responsible for the transport operation might therefore 77. The Spanish Government attributes the have had a genuine interest in minimising reluctance manifested by Commagric to the damage affecting the butter. Moreover, political instability in the country of desti- it is clear from the letter from the Spanish nation and pressure brought to bear by the customs authorities that Quesos Frías Algerian purchaser, in turn deriving from admitted that some of the goods had been State control of the market in question in damaged, so that the only issue then out- that country, without adducing the slightest standing related to the origin of the evidence to support its allegations. There damage. are thus no serious grounds for doubting the value of the check carried out by the authorities in the importing country.

81. The fact having been recognised that some of the goods were damaged, the 78. It is undeniable that the check of extent of the damage had not yet been 2 January 1993 was partial, in that only hold no 1 was inspected, and that Quesos Frías was not present. Those factors clearly 26 — Annex 8 to the defence.

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determined, and this could have been done the butter had not deteriorated. Those two by means of inquiries on the initiative of inspections can therefore be regarded only the Spanish authorities. as indicative: their probative force, being entirely relative, depends upon the produc- tion of further evidence. 28

83. The Spanish Government attributes the preparation of the expert's report entrusted to ISHA to the unilateral intention of 86. As well as the foregoing points directly Commagric to breach its contract with connected with the quality of the butter, Quesos Frías. However, it has produced account must be taken of the records of no evidence to support that assertion. accord and satisfaction signed on 7 January 1993 and 3 February 1993 29 by Quesos Frías and Commagric. In those two docu- ments it is stipulated that Quesos Frías took back the goods at issue and that the existing disputes were resolved. The docu- 84. As regards the content of the actual ment of 7 January provided for the pay- expert's report, the inadequacies com- ment by Quesos Frías of the sum of USD plained of, although beyond doubt in so 100 000 to Commagric. The sum was far as no reference is made to the procedure raised to USD 375 000 in the document used by the ISHA in reaching its conclu- dated 3 February, which supersedes the sions, affect in the same way the certificates earlier one. Moreover, the document of drawn up by the private company SGS, on which the Spanish Government relies in support of its contention that the quality of 28 — It should also be emphasised that the Commission has stated that Quesos Frías, of which a representative was present at the inspection, accepted the results thereof (paragraph 23 of the defence) and was not contradicted on 27 — First and last subparagraphs of Article 5(1) of Regulation this point by the Spanish Government. No 3665/87. 29 — Annex 9 to the application.

93. That factor increases the uncertainty as to the identity of the goods unloaded in Russia with the cargo loaded in Spain, already deriving from the conflict between 90. That is apparent in particular from the the examinations carried out after the veterinary certificates drawn up Burgos goods arrived in Cyprus, which coincide (Spain) on 4 May 1993, 30 from the bills of lading drawn up on 8 July 1993, after 31 — Annex 12 to the application. 32 — Annex 16 to the application. 30 —Annex to 11 to the application. 33 — Annex 14 to the application.

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in the view that the butter was in good the evidence in the file, then the require- condition, and the indications to the con- ment of an inquiry by the Commission is trary mentioned above. 34 justified and the lack of diligence on the part of the Member State concerned is such as to expose it to the risk of financial adjustments when the EAGGF accounts are cleared. 94. One may certainly take the view that the production date attributed to the butter in question is the result of a simple error, or affects the value of one item of evidence in the file, without a having any repercussions as to the decision to be given in these proceedings. 98. That also is the view taken by the conciliation body in its final report of 11 December 1996. 35

the butter shipped aboard the vessel Maere 104. That lack of diligence is confirmed by and asked for discharge of the guarantee or the Spanish Government itself, which sta- payment of the refunds to be temporarily ted that 'the explanations given by the suspended. 38 exporter and annexed to the application were so persuasive that it seems unneces- sary to take any further action, unless is decided to challenge the reliability of documents issued by certain public and private bodies, here and abroad'. 41

101. By letter of 28 October 1993 it asked the Spanish administration to initiate administrative or legal proceedings with a view to recovering the refunds improperly obtained by the exporter. 39 105. The dubious nature of those explana- tions has been noted, after comparison thereof with other evidence.

109. It is therefore clear that the selling price of the butter was substantially reduced, between May 1992 and July 1993, between the same contracting par- ties, since, notwithstanding the export to 112. It is appropriate to say, for the sake of Algeria, which was ultimately aborted, completeness and by way of information, in Prodintorg became the ultimate consignee order to give an answer to the Kingdom of of the goods. The fall in the selling price Spain which expressed uncertainty as to the cannot be accounted for solely by changes nature of the inquiries called for by the in the rate of exchange since the increase in Commission, that it might have been parti- the value of the dollar was not sufficient to cularly useful to take evidence or arrange compensate for the level of the final price. for evidence to be taken from certain participants in the various phases of the export transaction and for them to be confronted with each other, or indeed for the goods to have been inspected.

110. We can only query the reasons for such a substantial fall and regret the fact that no investigations allowed the Commis- sion to determine the true quality of the 113. As regards the people not resident on butter at the time of export, so as to Spanish territory, the possibility might have overturn the hypothesis of deterioration of been envisaged of having recourse to the goods on leaving Spain or in transit to administrative or legal proceedings under Algeria and thereby reduce suspicions that national law so as to arrange for the the goods were switched between Algeria competent authority to proceed with such and Russia. hearings.

Regulation (EEC) No 2913/92

Regulation (EEC) No 805/68

118. Pursuant to Article 68(b) of Council Regulation No 2913/92 of 12 October 115. Council Regulation 805/68 of 27 June 1992 laying down the Community Cus- 1968 establishes a common organisation of toms Code, 4 4 'For the verification of the market in beef and veal. 42 declarations which they have accepted, the customs authorities may... examine the goods and take samples for analysis or for detailed examination'.

116. Article 18(1) thereof provides that, to the extent necessary to enable the products governed by that regulation to be exported on the basis of quotations or prices for those products on the world market, the 119. Under Article 70(1) of the Commu- difference between those quotations or nity Customs Code, 'Where only part of the prices and prices within the Community goods covered by a declaration are exam- may be covered by an export refund. 43 — OJ 1981 L 265, p. 17. 44 — OJ 1992 L 302, p. 1, hereinafter 'the Community Customs 42 — OJ, English Special Edition 1968 (I), p. 187. Code'.

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122. The second financial adjustment made 126. The Commission asked the Spanish by the Commission relates to exports of customs authorities to open an inquiry. The

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exporter amended its declaration and was Chico SA (also referred to hereinafter as required to pay back the part of the export 'the exporter') to Benin. It attracted the refund corresponding to the proportion of payment of an export refund. the goods wrongly declared, plus 15%.

127. However, it was no longer possible for 131. On the basis of information given by the goods to be examined. the EAGGF, the Spanish customs authori- ties went to the exporter's premises where they found that the goods declared as 'unboned frozen beef and veal, unboned pieces, each piece packaged individually, code 0202 30 90 400' was in fact made up of unboned and frozen neck of beef, in 128. The Commission then informed the pieces weighing about one kilogram, not Spanish authorities that the consignment wrapped individually. was of uniform composition, but those authorities, taking the view that it had not been established that the part of the goods not examined comprised offal, refused to recover the export refund in full.

132. Senpa then immediately suspended processing of the applications for refunds from that company.

therefore considered it appropriate to correspond to what was declared, so that require the exporter to pay back the entire there were not sufficient legal grounds to refund received by it. require reimbursement of the refund in full.

135. The Spanish administration did not recover the aid, which prompted the Com- 138. It adds that the Commission is not mission to make a financial adjustment. entitled to propose, as it did, that the exporter should be indirectly penalised by forfeiture of all the aid, on the ground that it was untruthful in only part of its declaration, in the absence of any legal provision expressly providing for such a penalty. C — The application

141. It adds, finally, that the irregularities found are the result of a lack of appropriate control measures to prevent fraud and a 145. I refer again to Article 8 of Regulation lack of the requisite diligence when the No 729/70, which is concerned with the irregularities complained of by the Com- Member States' obligations regarding mission were investigated. inquiries and investigations into the pro- priety of operations financed by the EAGGF, the financial consequences of irregularities or negligence attributable to national administrations or authorities, and to the case-law of the Court in this area. 46 142. The Kingdom of Spain replies that all the goods exported were checked and that only part of them did not correspond with the declaration, so that the Commission cannot claim that the irregularities found affect the whole of the goods. It adds that there is no legal basis for the reversal of the 146. By letter of 6 April 1993, the Director burden of proof advocated by the Commis- of the EAGGF informed the Spanish cus- sion. toms authorities that '50% of the goods dispatched in 1992 to Côte d'Ivoire com- prised head meat (offal not giving rise to eligibility to refunds)'. It asked the autho- rities to undertake an inquiry. 47

143. The Spanish Government states that it fulfilled its obligation of diligence by immediately checking which part of the goods declared did not coincide with the declaration. 147. Clear details raising serious suspicions as to the nature of the goods exported to

45 — See, for example, the judgments in Case C-209/96 United Kingdom v Commission [1998] ECR I-5655, paragraph 40; Case C-232/96 France v Commission [1998] ECR I-5699, paragraph 42; Case C-233/96 Denmark v Com- 144. As recently repeated by this Court, in mission [1998] ECR I-5759, paragraph 43, and Case view of the division of powers between the C-238/96 Ireland v Commission [1998] ECR I-5801, paragraph 86. Community and the Member States in the 46 — See paragraphs 49 and 50 of this Opinion. field of the common agricultural policy, 47 — Annex 15 to the defence.

153. The Commission has also pointed out that the inquiries by the Spanish authorities were incomplete in that they dealt only with the producer's documents recording 150. That information was confirmed by purchases and sales. another letter from the Spanish customs authorities, dated 1 October 1993, report- ing that, according to the exporter, the balance of the goods corresponded to code 0202 30 90 400, which is eligible for refunds. The Spanish authorities added that 154. In that connection, it should be noted investigations to determine the exact nature that the Spanish Government states that: of the meat exported were proceeding. In 'The Spanish authorities were unable to that letter, the Spanish authorities first gave prove that the remainder of the goods also a brief description of the company Rubiato consisted of offal, and therefore saw no Paredes and its business and it drew reason to call for the entire aid to be attention to the difficulties encountered in repaid', 50 and indicates that 'An examina- determining ex post facto the true nature of tion of all the goods exported was carried the meat exported on the basis of the

49 — Ibid. 48 — Ibid. 50 — P. 36, paragraph 2, of the application for annulment.

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out in accordance with the customs regula- 158. The Spanish Government therefore tions', 51 without producing the slightest considers that there is no legal basis for evidence to show, in support of that demanding repayment of the entire aid assertion, that the goods in question had received and that it was entitled to claim been examined more thoroughly. reimbursement only of the aid correspond- ing to the part of the declaration acknowl- edged to be incorrect.

160. The Spanish Government claims that 157. It adds that the finding of irregula- its inspection authorities not only con- rities resulted merely from a check of firmed that the code declared was not the documents and that it is not permissible correct one for some of the goods exported, for the Commission to use the verification but sought to determine what code was carried out by the Spanish authorities to appropriate, which prompted them, on prove that part of the customs declaration finding that a lesser amount of aid was was incorrect whilst not taking account of due, to limit their request for reimburse- the finding that there was nothing to show ment of the overpayment. It adds that there that the declaration was not in order. is nothing in the Community rules to enable a Member State to penalise an economic operator by depriving it of the 51 — P. 10, paragraph 12(2) of the reply. full amount of the aid.

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161. By his abovementioned letter dated 165. The reasons already given regarding 6 April 1993, the Director of the EAGGF the export to Côte d'Ivoire, for which I asked the Spanish customs authorities to suggested that the Court declare that the open an inquiry into the meat exports inspections and inquiries undertaken by the bound for Benin. Photographs attached to Spanish Government did not meet the his letter show that the goods were not requirements of Article 8 of Regulation packaged individually, contrary to what No 729/70, apply to the conduct for which was stated in the declaration. the Kingdom of Spain is criticised in relation to exports by the company Avíco- las El Chico.

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undertaken by it under Article 8 of Reg­ 170. That regulation established a system ulation No 729/70 were complete and of financial compensation designed to diligent, and therefore the financial adjust­ encourage the processing of certain vari- ment imposed by the Commission on Spain eties of oranges under contracts ensuring is justified. regular supplies to the processing industries at a minimum purchase price to the pro- ducer. 5 6

171. Article 1 of Regulation No 2601/69 provides that measures undertaken in ΠΙ — Aid for the processing of citrus fruit accordance with the rules laid down in Article 2 with a view to ensuring that mandarins, satsumas, clémentines and oranges are put to a use more in keeping with their commercial characteristics, by having greater recourse to processing, are to qualify for assistance from the Guaran- tee Section of the EAGGF under the A — The Community legislation conditions and procedures laid down in Article 3.

Regulation (EEC) No 2601/69 1 7 2 . A r t i c l e 2 ( 1 ) of Regulation No 2601/69 provides:

174. According to the first and last sub- paragraphs of Article 3(1) of Regulation No 2601/69, 177. At the beginning of 1994, the EAGGF inspectors undertook inquiries regarding financial compensation intended to encou­ rage the processing of citrus fruit, which 'Member States shall grant financial com- had been paid in advance by the Spanish pensation to those processors who have administration. concluded contracts in accordance with the provisions of Article 2.

178. Following a visit to the processor Vital Schneider (hereinafter 'the proces­ sor'), the inspectors found that 78 contracts concluded with the producers of citrus fruit had been postdated by several days.

The amount of such financial compensa- tion shall be fixed before the beginning of each marketing year.' 179. The date of 9 February 1993 had been replaced by 13 February 1993: the transac­ tion in question was subject to the mini­ mum price applicable on the latter date, which was lower than the price previously agreed. 175. Regulations Nos 2601/69 and 1123/89 were repealed with effect from 12 November 1993. 57

57 — Articles 13 and 14 of Council Regulation (EC) 180. The price mentioned in the contracts No 3119/93 of 8 November 1993 laying down special measures to encourage the processing of certain citrus concerned, which had not been changed, fruits (OJ 1993 L 279, p. 17). was ESP 1 985/100 kg.

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187. The Spanish Government rejects the 58 — Article 1 of Commission Regulation (EEC) No 87/93 of 19 January 1993 derogating from Regulations (EEC) Commission's view that the processor No 1423/92 and (EEC) No 1423/92 and (EEC) changed the date in the contract to secure No 3115/92 concerning the minimum purchase price for lemons and oranges delivered for processing and the the minimum price in force whilst at the amount of the financial compensation after processing of same time benefiting from the aid provided such products applicable in Spain until the end of the 1992/1993 marketing year (OJ 1993 L 12, p. 15). for as at the initial date of signature of the 59 — Article 1 of Commission Regulation (EEC) No 278/93 of 8 February 1993 derogating from Regulation (EEC) contracts, which was of a higher amount. It No 3115/92 fixing, for the 1992/1993 marketing year, maintains that, on the contrary, the pro- the minimum purchase price for oranges delivered for processing and the financial compensation payable after cessor received aid of a lower amount, processing and from Regulation (EEC) No 1562/85 with regard to information to be supplied to the Commission corresponding to the contracts concluded (OJ 1993 L 33, p. 8). after 12 February.

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188. In support of its decision, the Com- that, until such time as the contracts have mission contends that the change to a date been delivered to the authorities, there is of a contract made in order to secure an nothing to prevent the contracting parties advantage deriving from a change of price from negotiating and adjusting the con- in a Community regulation adopted after tracts to suit their particular aims. the contract was concluded cannot attract Community financing.

191. The Kingdom of Spain considers that it is lawful for a processor to amend his 60 — The reference to the date of conclusion of the contract to determine the temporal application of minimum purchase contracts with a view to receiving aid and prices is contained in Article 1 of Regulation No 278/93.

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defending the view that the processor 198. It is therefore necessary to examine recognised having applied for and obtained the question raised by the present applica- payment of financial compensation in tion within the limits of the facts as thus respect of the period before 12 February stated. 1993, which was of a higher amount than the compensation corresponding to the amended date. According to the Spanish Government, the Commission took the view that the processor had postdated the contracts to justify the price paid to the 199. The existence of fraud depends, in this producers, which was lower than the case, on the limits which one imposes on minimum price laid down for the preceding the power of the contracting parties — period, whilst at the same time receiving producers and processor — to amend a the higher level of financial compensation contract which might attract Community corresponding to the latter period. 61 aid.

200. As we have seen, two aspects of the 196. The Commission has not confirmed contract, the price and the date, are decisive that position to the Court. It has stated very as far as the grant of financial compensa- clearly that the processor's intention, tion under Regulation No 2601/69 is con- reflected by the 'adjustment' of the dates cerned. The changes made by the contract- of the contracts, was to 'be able to benefit ing parties in those areas thus enable them from Community aid'. 62 to affect the award of aid.

208. The fixing of a price by producers and a processor, as at a precise date, albeit a 204. Such encouragement of processing date which is amended by agreement through regular supplies to the processing between them, a priori fulfils the conditions industry is subject to the condition that, by laid down by the relevant legislation since the fixing of a minimum purchase price for the minimum prescribed price is observed the producer, the producer receives ade- on the date chosen by the contracting quate remuneration. 64 parties and attains the objectives set by the legislation.

205. The applicable legislation is therefore 209. In this case, the price, which the designed to encourage processors to accept parties to the contract did not change, a certain price level by following the exceeds the minimum level laid down by minimum reference price fixed on certain Regulation No 278/93, which means that, dates by the Community legislature. at the same time, there is both an outlet for the production of the fruit concerned and a guarantee that producers will be remuner- ated for their activity at the legally pre- scribed level.

206. Like many other economic regula- tions, this one seeks to encourage specific courses of conduct on the part of economic 210. It is true that the date of the contracts operators in the field of production or was amended but nobody disputes that, marketing of products by recourse to despite the difference of a few days, 65the financial incentives to attain the objectives marketing year had not started and the pursued. contracts at issue had not been performed.

215. Can it thereby be conceded that a factor as important as the date of the 212. In response to the Commission's argu- contract can be changed without closely ment that the change of date is damaging to examining the risks of fraud which the the Community in so far as the processor is change exposes the Community budget? seeking to obtain aid which was not due on the date initially fixed, it must be stated that financial compensation would never- theless have been duly paid if the contract- ing parties had, involuntarily, delayed sign- ing the contracts for a few days or if, having been alerted to the reduction in the minimum price, they had voluntarily defer- red the time of signature or chosen to 216. In fact, the date on which a contract is cancel the contracts preparatory to signing concluded is not comparable to the other at a later date new contracts for the same factors since, as properly emphasised by the purpose setting the same price. Commission, it is a factor which in part is alien to the contracting parties. They may be able to choose the date of signing an 66 — It should be noted, in that regard, that the regulation in agreement, but care must be taken before question was adopted on the day before the contracts at admitting that they are entitled to attribute issue were initially concluded and that it was published in the Official Journal of the European Communities on the fictitiously to that agreement a date other same day. However, its date of entry into force, the third day after publication, was 12 February, which doubtless than that on which they effectively con- accounts for the changes made to the contracts in question. cluded it.

219. Even though mutually agreed by the parties, that change would nevertheless be fraudulent if the date specified could not in any circumstances reflect reality. That would be the case if it postdated perfor- mance or the commencement of perfor- 221. It is not then a question of their mance of a contract, or if notification of the falsifying reality by fictitiously replacing contract in accordance with certain legal one date by another, but simply a question formalities, such as those which determine of substituting one contract for another, the whether or not certain rights will be parties taking the view, to which they are available, 6 7gave it a definitive date 68 entitled by virtue of the principle of con- and, by rendering it effective vis-à-vis third tractual freedom, that, having regard to parties, took it out of the private sphere of new developments concerning the condi- tions for the payment of financial aid, the earlier as yet unperformed contracts should 6 7 — Thus, the last subparagraph of Article 2(1) of Arti- be cancelled and replaced by new ones, cle 2601/69 provides that, as soon as they are concluded, contracts are to be sent to the competent authorities of the with the same parties, the same subject- Member States involved. It is natural that, once the contract has been forwarded, its date is deemed unalter- matter and the same price, but a different able. date. 68 — That is certainly the objective pursued by the national law of certain Member States, as in the case of Article 1227 of the Spanish Civil Code, by virtue of which, according to the Kingdom of Spain, the date of a private document is inoperative vis-à-vis third parties until an event occurs from which it can be inferred that the document could not have been signed at a later date, for example the death of one of the signatories, delivery of the document to an official acting as such or the date of its entry on a public register (paragraph 22 of the reply). A comparable example is to be found in Article 1328 of the French Civil Code, according to which 'Documents not officially attested shall be deemed, vis-à-vis third parties, to be 222. I think the difficulty of the problem undated until such time as they have been registered, the raised on this point by the Kingdom of day on which a person or persons who signed it die or the day on which the substance of such document is recorded Spain's objection lies in the ambiguity in instruments drawn up by officials vested with public stemming from the fact that the same authority, such as records relating to the affixing of seals or documents were retained for contracts preparation of inventories'.

229. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they are applied 226. It should be made clear, in that for in the successful party's pleadings. connection, that the Commission has not However, under Article 69(3), if the parties only put forward no arguments based on succeed on some and fail on other heads, provisions of Community law relating to the Court may decide that the parties are to changes to the date of a contract, like the bear their own costs. Since the Kingdom of change made in this case, alleging fraudu- Spain's action has been partially upheld, the lent conduct, but also has produced no Court should give a decision in those terms.

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OPINION OF MR LÉGER — CASE C-240/97

Conclusion

230. In view of the foregoing considerations, I suggest that the Court:

(1) annul Commission Decision 97/333/EC of 23 April 1997 on the clearance of the accounts presented by the Member States in respect of the expenditure for 1993 on the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (EAGGF), for the financial year 1993, to the extent to which the Commission did not charge to the EAGGF a sum of ESP 58 804 012 corresponding to financial compensation paid in advance by the Kingdom of Spain in respect of the processing of citrus fruits;