C-2/99

DOHLER

OPINION OF ADVOCATE GENERAL COSMAS delivered on 18 May 2000 *

I — Preliminary remarks No 2169/86. That regulation provides, in principle, that persons using starch for the production of approved products (manu- facturers) may claim a production refund per tonne of basic starch; to that end, the 1. In this case the Court is asked to answer Community legislature lays down detailed two questions referred by the Hessisches procedural rules and establishes a system Finanzgericht (Finance Court, Hessen) for a for the control of refund applications. In preliminary ruling under Article 177 of the outline, the procedure is as follows: man- EC Treaty (now Article 234 EC). Those ufacturers who intend to claim production questions concern the interpretation of the refunds apply to the competent national provisions of Article 7 of Regulation (EEC) authorities; if they satisfy the conditions No 2169/86, 1 as amended by Regulation laid down by Regulation No 2169/86, the (EEC) No 165/89. 2 authorities include them on the list of 'approved manufacturers'. The manufac- turer then submits an application in writing for a 'refund certificate'. 3 The issue of the certificate is subject to the lodging of a security in accordance with Article 7 (the provision at issue) of Regulation No 2169/86. Holders of such certificates II — Legal context are entitled to claim payment of the refund4 after the starch has been processed into one of the 'approved products' as defined in Article 1 of Regulation No 2169/86, which refers to Regulation 2. It is essential to describe the legal (EEC) No 1009/86. 5 Payment of the context of the proceedings pending before refund and release of the security take the national court in order to be able to place as soon as the holder of the certificate understand the problems of interpretation has provided the administrative authority raised by the questions referred for a with the information referred to in Art- preliminary ruling. Those questions con- icle 8 of Regulation No 2169/86 and when cern certain provisions of Regulation

3. However, experience showed that that mechanism for the grant and control of refunds did not allow effective prevention of certain forms of speculation in which Article 7(4) of Regulation No 2169/86, as manufacturers were engaging, especially in it applies in this case, is worded as follows: the case of esterified or etherified starch. That product has the characteristic of being reprocessable into a raw material, so that manufacturers can, in certain circum- stances, apply (illegally and wrongfully) for more than one refund. That was the reason for the adoption of Regulation 'Without prejudice to paragraph 2, the (EEC) No 3642/87, 6 which provides that security referred to in paragraph 1, second where the product indicated on the certifi- subparagraph, shall only be released if the cate is esterified or etherified starch, that is competent authority has received proof to say, where it falls under Common that the product under CN code 3505 Customs Tariff CN code 3505 10 50, the 10 50 is: security provided for in Article 7 of Reg- ulation No 2169/86 'shall equal 105% of the production refund to be granted for the manufacture of the product in question'. 7 That security is released if the competent authority has received proof that the pro- duct 'has been used to manufacture pro- (a) used to manufacture products other ducts other than those listed in Annex 1', 8 than those listed in Annex I; or that is to say, has been processed into a product which cannot be reprocessed into a raw material.

(b) exported to third countries. 4. That specific set of rules for esterified or etherified starch was modified by Regula-

III — Facts and procedure

6. The German company Dehler GmbH. (hereinafter 'Döhler'), which is the plaintiff

9 — Regulation of 30 lune 1993 laying down detailed rules for the application of Council Regulations (EEC) No 1766/92 Article 7(5) of Regulation No 2169/86, in and (KKC) No 1418/76 concerning production refunds in the cereals and rice sectors respectively (OJ 1993 L 159, the version which was in force at the time p. 112).

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DOHLER

Döhler brought an action against the previous 12-month period apply abovementioned decision before the irrespective of whether the security national court, which has found it neces- provided by the manufacture — sary to refer the following questions to the possibly on account of a knowingly Court of Justice for a preliminary ruling. false undertaking by the party referred to in Question 1 — has been released?

IV — The questions referred

V — The first question referred release of the security provided for by Article 7 of Regulation No 2169/86 or to the illegal grant of a refund. Furthermore, the disputed requirement to pay is imposed 'without prejudice to national penalties'. That phrase used by the Community legis- lature means, first, that the measure intro- duced by Article 7(5) constitutes an admin- 8. The main issue of concern to the istrative penalty and, second, that the national court is whether purchasers of principle of non bis in idem does not apply esterified or etherified starch who have in this case. given an undertaking as provided for in the fourth subparagraph of Article 7(4) of Regulation No 2169/86 fall within the category of persons who can be required to pay 'an amount equal to 105% of the highest production refund applicable to the product in question during the previous 12-month period' pursuant to Article 7(5) 10. It is essential to emphasise also the of that regulation. I consider it appropriate importance of preventing speculation and to make three preliminary remarks. fraud in connection with the sensitive issue of production refunds for esterified or etherified starch.

substances concerned into approved pro- conditions for, and the scope of, that ducts, so as to ensure the irreversibility of penalty'. 16 For that reason, the Court did the processing; that requirement is there- not allow a Community provision imposing fore a 'primary requirement' within the penalties on milk producers for infringe- meaning of Article 20(2) of Regulation ments committed in connection with the (EEC) No 2220/85. 12 Compliance with system for the common organisation of the the conditions laid down by Article 7(4) market to be interpreted widely as meaning of Regulation No 2169/86 in connection that it was also applicable as against the with the processing and distribution of purchasers, even though the latter were etherified or esterified starch clearly falls responsible for the infringements estab- within the scope of the abovementioned lished. proper-use requirement. However, it should be pointed out that the Kyritzer Stärke judgment concerned a producer of starch who had lodged a security with the object of benefiting from a production refund and not a purchaser of starch like the plaintiff It is therefore not possible, by means of an in the main proceedings. interpretation, to circumvent the require- ment for the legislature to formulate clearly any rules providing for penalties, however appropriate the application of the penalty concerned may appear for ensuring the observance of Community law. That requirement entails, at the very least, the 11. Finally, it should be borne in mind that, need to define, first, the infringement for when the Community legislature prescribes which the penalty is imposed (crimen), penalties, it must satisfy certain conditions second, the nature and content of the which the Court has laid down in settled penalty provided for (poena) and, third, case-law. In the Könecke judgment, 13 the the category of persons to which the Court held that 'a penalty, even of a non- mechanism of the administrative penalty criminal nature, cannot be imposed unless applies. it rests on a clear and unambiguous legal basis.' 1 4The Milchwerke Köln/Wuppertal judgment 15 is also relevant with regard to the answers to be given to the questions referred in this case; in that judgment the Court held that '[notwithstanding the need In summary, the first question referred asks to combat fraudulent transactions, a pen- the Court to consider, first, whether the alty consisting in the substitution of the penalty provided for in Article 7(5) of purchaser for the producer presupposes the Regulation No 2169/86 also applies to existence of a legal basis laying down the purchasers of esterified or etherified starch who have given the undertaking referred to in the previous paragraph of that article; 1 2 — Commission Regulation of 22 July 1985 laying down second, if so, to what extent the penalty in common detailed rules for the application of the system of question is compatible with the require- securities for agricultural products (OJ 1985 L 205, p. S). 13 — C a s e 117/83 11984) ECR 3291. 14 — Paragraph 11 of the Könecke judgment, cited in footnote 13 above. 1 6 — P a r a g r a p h 22 of the Milcbwerhe Köln/Wuppertal judg- 15 — Case C-352/92 [1994] ECR 1-3385. ment, cited in footnote 15 above.

The penalty provided for in Article 7(5) of 12. This question is raised by the national Regulation No 2169/86 is thus intended to court and by the plaintiff in the main deal with infringements connected with the proceedings. They maintain that applic- wrongful and possibly fraudulent release of ation of the penalty at issue to purchasers the security provided for by that article. of starch poses problems, inasmuch as such The identity of the party who may be purchasers are not eligible for production regarded as having committed the infringe- refunds and the penalty is directly linked to ments in question depends on the wording the release or non-release of the security and content of the legal rules which have which the manufacturer has been requested been infringed; those rules are not prec- to lodge. Only the manufacturer can there- luded a priori from affecting parties other fore be punished for any infringement of than the manufacturer who lodged the the rules concerning the security which are security, in particular the purchasers of laid down by the regulation in question. the products in question.

In conclusion, I am of the opinion that no In principle, in previous paragraphs of the superior rule of law precludes the Commun- same article, the Community legislature ity legislature from introducing a mechan- uses the term 'manufacturer' to refer to the ism under which non-compliance by pur- person who claims the production refund chasers of a product with undertakings and who is required to lodge a security; which they have given, as a consequence of however, in the disputed passage in para- which the seller obtains the release of the graph 5, which describes the content of the security which he had been requested to administrative penalty in question, it uses lodge, entails the imposition of penalties on the term 'party concerned' to define per- those purchasers. sons falling within the scope of that pen- alty. The difference in terminology could be construed as evidence of the intention of the Community legislature not merely to punish the conduct of offending manufac- turers, but also to extend the application of It remains to be examined whether Regula- penalties to other categories of persons. tion No 2169/86 did in fact introduce such Otherwise one would expect it to use the a penalty mechanism which satisfies the term 'manufacturer' in the relevant part of conditions laid down by the case-law with Article 7(5) as well. regard to administrative penalties.

14. That observation is not, however, a sufficient basis for a satisfactory interpreta- Irrespective of the foregoing, in order to tion of the provisions at issue, and it cannot argue without qualification that, by using be maintained that the term 'party con- the term 'party concerned', the Community cerned' does not necessarily equate to legislature intended to bring the purchasers 'manufacturer'. of esterified or etherified starch within the scope of the penalty provided for, it will be necessary to examine the infringements for which the category of persons referred to by the term 'party concerned' is held responsible. If they are infringements of The first argument in favour of such rules which impose certain public-law obli- equation derives from Article 7(4) of Reg- gations on purchasers, I do not see any ulation No 2169/86 itself. The last sentence reason why such persons should be ex- of that paragraph states that, where proof cluded from the scope of the penalty in that the product at issue has left the question. customs territory of the Community must be furnished by the production of a control copy T 5 , 1 7 and where that copy is not returned to the competent authorities within the period laid down 'owing to circumstances beyond the control of the party concerned,18 the latter may apply to the competent authority for other docu- (b) The infringement justifying the penalty ments to be accepted as equivalent ...'. at issue Article 7(4) supports the conclusion that the person who is referred to as the 'party concerned' in the provision at issue cannot be anyone other than the manufacturer, who seeks the release of the security which he himself has provided. Consequently, if, for the purposes of Article 7(4), 'party 15. The Community provisions in question concerned' is restricted in meaning to the are not particularly clear. The wording of manufacturer, it is not possible for exactly Article 7(5) indicates that the penalty pro- the same legal term to have a different vided for by that article is imposed where the competent national authorities find, in the course of the administrative checks to 17 — That control copy is issued pursuant to the provisions of ascertain whether 'the declaration men- Commission Regulation (EEC) No 2823/87 of 18 Septem- tioned in paragraph 4 has been fully com- ber 1987 on the documents to be used for the purpose of implementing Community measures entailing verification plied with', that the party concerned 'fails of the use and/or destination of goods (OJ 1987 L 270, p. 1). to comply with the conditions specified in 18 — Emphasis added. this article'.

The validity of that interpretation of the provisions in question is not incontestable. Can it nevertheless be maintained that the It could be argued that the obligation to obligation assumed by the purchasers con- make proper use of the starch, on which the stitutes one of the 'conditions specified in proper functioning of the production this article', as referred to in Article 7(5), refund mechanism is based, rests not only with the result that non-compliance by on the manufacturer vis-à-vis the compe- them with that obligation justifies the tent national authorities, but also on his imposition on them of the penalty provided assignees, who have become the owners of for in that paragraph? I do not regard that the product. To that effect, it may be reasoning as the more satisfactory. If the inferred from Article 7(4), which provides manufacturer sells the product concerned, that the manufacturer is not entitled to release of the security presupposes the obtain the release of the security unless he presentation by him of a declaration stating has declared that he will sell the product 'to that the purchasers engage in the same a party who will engage in the same requirements as he with regard to the use of requirements' as he, that the obligation the product and that a copy of the under- assumed by the purchasers is of the same taking given by the purchasers is forwarded nature as that of the manufacturer, and that to the administrative authorities. Yet what non-compliance with that obligation is a is the legal nature of that undertaking and sufficient reason to impose on them the to whom is it given? Despite the obscurity penalty provided for in Article 7(5).

I have already explained that I cannot agree provisions at issue and the logic underlying with the interpretation which I have just the mechanism for the grant and control of described; I shall put forward below certain production refunds. It argues, in particular, further arguments which support that con- that, since he has presented the declaration clusion. First, however, I consider it essen- provided for in Article 7(4) of Regulation tial to make clear that, even if one agrees No 2169/86, which indicates that he is with that interpretation, it is not obvious selling the product to a party who engages that the obligations resting on the purcha- in the same requirements as he, the man- ser equate to those resting on the manu- ufacturer, who has lodged the security, has facturer. In particular, the manufacturer fulfilled his basic obligation with regard to who sells the starch must ensure that he the proper use of the starch, and the obtains from the purchasers a document penalty provided for in Article 7(5) may certifying that they engage in the same no longer be imposed on him. The Com- requirements as he. On the other hand, it is mission takes the view that the contrary not obvious that that formal obligation solution would run counter to the principle rests on the purchasers vis-à-vis the admin- of liability based on fault, which governs istration, that is to say that they must Community administrative penalties. Con- obtain the document concerned from the sequently, since it is impossible to impose subsequent purchasers when they resell the the penalty at issue when he has complied product. Their obligation — assuming with his obligations under Regulation that an obligation exists — appears to be No 2169/86, it is essential to afford the confined to ensuring that proper use is national administrative authorities the pos- made of the product. 19 sibility of implementing those same provi- sions by providing for a penalty on pur- chasers who have not abided by the under- takings given with regard to the use of the product in question. The effect of a differ- ent interpretation of the provisions at issue (c) The scheme of the provisions at issue would be to allow the release of the security and the grant of any refunds claimed even though the esterified or etherified starch may not have been put to proper use and there is no possibility of penalising those guilty of such wrongful conduct. 16. As the basis for its argument concern- ing the liability of the purchaser, the Commission relies on the scheme of the

22 — Paragraph 35 of the Boterlux judgment (cited at footnote 21). It should be pointed out, first, that it is not 23 — Nor are the conclusions of that case-law, the effect of necessarily contrary to any superior rule of which is to allow strict liability with respect to a trader who has benefited from Community aid, called in question Community law to assign strict liability to bv the (recent» judgment in Case C-366/95 Steff-iintdherg Exfmrt and Others 119981 HCR 1-2661.

not personally responsible. Reference There is a funda mental difference between the legal context of the Piange Kraftfutterwerke and iìoterinx should be made to the Piange Kraftfutter- judgments on the one hand and that of the Steff-Houlberg werke case, 20 in which the Court held that, Export and Others case on the other. In both the former there were specific provisions of Community law which where a trader undertakes to export pro- regulated the procedures for recovering Community refunds wrongfully granted; i n Steff-Hotilberg Export ducts which must satisfy certain conditions and Others, in the absence of Community provisions governing the matter, it was necessary to apply the and the products in question do not fulfil contrary provisions of national law. 1'rom a combination of the two solutions outlined above it follows, first, that those conditions, that trader must auto- the Community legislature is free to provide for a system matically repay the relevant refunds, even if under which a trader acting in good faith can be strictly liable and required to repay any sums wrongfully received, he is not responsible for the defects in the but, second, that, if there are no relevant provisions of Community law, ami in the context of the legal autonomy products at issue. of the Member States, national law is not precluded from providing only for a system of liability based on fault and exempting the trader acting m good faith, under certain conditions, from repayment of the aid, whilst always taking account of the Community interest. Consequently, assuming that the provisions in question of Regulation No 2169/86 introduce directly a Community

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In particular, the manufacturer is required to pay the sum specified in Article 7(5) when- ever the administration finds that he or one of the purchasers who have obtained ester¬ ified or etherified starch from him is not making proper use of that product. In such a case, the manufacturer, who lodged the security, is not, in my view, entitled to plead absence of liability on his part, since his liability is defined by law as strict. It is the

Even if it were to be accepted that liability is transferred from the manufacturer to his contracting partner by reason of the undertaking given by the latter pursuant to Article 7(4), it is not clear that a corresponding transfer of liability can take place from the abovementioned purchaser to the subsequent purchasers; the provisions in question of the 18. I believe that the latter solution is regulation do not contain any express mention of under- takings which the subsequent purchasers, that is, the preferable for yet another reason. The assignees of the first purchaser, are requested to give.

Consequently, the argument that the above- requested to lodge, and has lodged, security mentioned interpretation is more in keeping with the principle of liability based on the fault of the person on of an amount equal to that of the penalty whom the administrative penalty is imposed is without provided for in Article 7(5). If, therefore, foundation.

In particular, as far as the problem at issue is concerned, it can be inferred from the It is thus made clear that the undertakings analysis of Regulation No 1722/93 that, in given by the purchaser — and described in adopting that legislation, the Community the declaration submitted by the manufac- legislature chose to maintain the same turer to the competent authorities — are penalty mechanism as that already existing given vis-à-vis the manufacturer and not in Article 7(5) of Regulation No 2169/86, vis-à-vis the administration and that they while making certain improvements to it are therefore contractual in nature and are and wording the relevant provisions in a governed by the law of obligations; it clearer, more appropriate manner. The therefore cannot be said that the purchaser relevant provisions are those of Article 10 assumes, vis-à-vis the administrative autho- of Regulation No 1722/93. rities, obligations under public law, breach of which could, in certain circumstances, give rise to the application of an adminis- trative penalty.

Article 10(2) of Regulation No 1722/93 corresponds to Article 7(4) of Regulation No 2169/86. That provision of Regulation

25 — The Court has, moreover, held in the Kyntzer Stärke case I believe that it is more appropriate to (cited in footnote 10 above, paragraph 11) that 'Regula- apply exactly the same interpretation to the tion No 1722/93... reproduces, as the 13th recital in its p r e a m b l e i n d i c a t e s , the provisions of Regulation contested provisions of Regulation No 2169/86, adapting them to the current market situa- tion and repealing that regulation'. In the same case, No 2169/86, which are at issue; those Advocate General Léger states (point 36 of the Opinioni that 'the similarities between the 1986 and 1993 regula- tions appear to warrant interpreting them jointly in order to furnish the reply to the national court's questions'. 26 — Emphasis added.

20. On the basis of the foregoing analysis, the answer to this question must be in the negative, regard being had to the above- mentioned case-law concerning the obliga- tion incumbent on the legislature to define non-criminal Community penalties clearly. It would be sufficient to point out that the mere fact that the search for the true D — Conclusion meaning of the provisions of Article 7(4) and (5) of Regulation No 2169/86 requires detailed explanations and complex evalua- tions reveals the confused and obscure nature of those provisions. Consequently, if the Commission's interpretation concern- 21. In the light of the foregoing, I am of the ing the existence of a penalty aimed at view that, correctly interpreted, the term purchasers is adopted — a view with 'party concerned' used in Article 7(5) of which, as I have explained, I do not agree — the penalty in question becomes inapplicable because it does not rest on 'a 27 — See footnote 13 above.

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28 — In specific terms, the penally provided for by Article 7(5) is the consequence of the administrative checks carried out in order to ascertain whether the declaration made by the manufacturer under the previous paragraph of the same article has been complied with. If that declaration bas not been genuinely complied with, two scenarios are possible: VI — The second and third questions The more likely is that the security has already been released, as the Commission acknowledges in point 1 3 of referred its written observations. It should be borne i n mind that the security is to be released only 'if the competent authority has received proof that the product under CN code 3505 10 50 is ... used to manufacture products other than those listed in Annex I'; that proof is furnished by the presentation of the manufacturer's declaration to the competent authority. Consequently, once the declaration referred to in Article 7(4) has been presented, the condi- tions to which release of the security is subiect are fulfilled and the checks provided for in the following paragraph of 22. If the first question is answered in the the same article are carried out a posteriori. 'the purpose of the penalty provided for in Article 7(5) is to compensate negative, there is no need to answer these for the damage resulting from the wrongful release of the security; moreover, the amount of the penalty corresponds questions. Purely in the alternative and for to the amount of the security provided for by the same article. the sake of completeness, however, the following may be added. Exceptionally, I can imagine a scenario in which the administration has not taken care to release the security promptly, even though it has in its possession the manufacturer's declaration referred to in Article 7(4); on the other hand, the administrative checks provided for in paragraph 5 have been carried out very promptly and have shown that the abovementioned declaration has not been complied with. In this exceptional scenario, I do not think that it would be appropriate to apply the penalty provided for in Article 7(5). It would be sufficient merely to refrain from releasing the security lodged, in order to ensure that the Community interest is sufficiently protected. In other words, the close link between the penalty at issue and the release of the security which the manufacturer is requested 23. In the first part of the second question to lodge leads to the conclusion that the application of the referred for a preliminary ruling, the former depends on the release of the latter.

The other solutions for calculating the period in question, which adopt as the 25. Finally, the third question referred starting point, first, the time when 'im- raises the problem of the point in time proper use' is made of the product in from which the 12-month period provided question by the manufacturer or his assign- for in Article 7(5) is to be calculated in ees, second, the time when the administra- order to determine the amount payable by tion establishes the infringement or, third, the person on whom the penalty is the time when the penalty is imposed, are imposed. The wording of the legislation is less convincing. The first is difficult to not particularly clear. However, in the light apply in practice since it cannot be ascer- of the foregoing analysis, which indicates tained precisely when the 'improper use' of that the penalty at issue is intended to apply the product starts. The other two depend to only to the manufacturer, the more satis- a great extent on the diligence of the factory interpretation seems to me to be authorities responsible for carrying out that the reference date for determining the the checks; I do not think that it is normal for the amount of a fine to fluctuate according to the degree of diligence shown 29 — See the wording of the second question referred. by the administration.

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VII — Conclusion

26. In view of the foregoing considerations, I propose that the Court answer the questions referred for a preliminary ruling as follows:

The penalty provided for in Article 7(5) of Commission Regulation (EEC) No 2169/86 of 10 July 1986 laying down detailed rules for the control and payment of the production refunds in the cereals and rice sectors, as amended by Commission Regulation (EEC) No 165/89 of 24 January 1989, is not intended to apply to a purchaser of esterified or etherified starch who has given, vis-à-vis the manufacturer, the undertaking described in the previous paragraph of the same article.