C-101/99

OPINION OF MR MISCHO — CASE C-101/99

OPINION OF ADVOCATE GENERAL Mischo delivered on 15 May 2001 1

1. The purpose of Council Regulation allocated to it, that sugar will be classified (EEC) No 1785/81 of 30 June 1981 on as C sugar. In accordance with Article 24(1) the common organisation of the markets in of the basic regulation: the sugar sector 2('the basic regulation') is to attain certain objectives pursued by the common agricultural policy, in particular to guarantee producers a fair standard of living and to guarantee supplies to con- '... For the purposes of this Regulation: sumers at reasonable prices by means of a system of price and disposal guarantees varying in accordance with the production quotas allocated to undertakings in the various Member States. (a) "A sugar"... mean[s] any quantity of sugar ... the production of which is attributable to a specific marketing year and which is produced by the undertaking concerned within its A quota;

2. For each marketing year starting on 1 July one year and ending on the following 30 June, each Member State is allocated an A sugar quota, linked to the absorption (b) "B sugar"... mean[s] any quantity of capacity of the Community market, and a B sugar ... the production of which is sugar quota for it to divide among the attributable to a specific marketing various undertakings established in its year and which is produced by the territory, each receiving both an A and a undertaking concerned outside its A B quota. quota but within the sum of its A and B quotas;

(c) "C sugar" ... mean[s] any quantity of 3. If an undertaking produces a quantity of sugar the production of which is sugar in excess of the A and B quotas attributable to a specific marketing year and which is produced either by the undertaking concerned outside the 1 — Original language: French. sum of its A and B quotas or by an 2 — OJ 1981 L 177, p. 4. undertaking which has no quota'.

12. During the second half of 1992 British Sugar became aware, having regard to the beet crop which was going to be delivered 7. If, notwithstanding, it does dispose of C to it, that it would produce a volume of sugar on the Community market, that sugar far in excess of its A and B quotas, sugar will be treated as though it were and would accordingly be in possession of a sugar imported from a non-member very considerable quantity of C sugar country, with the result in particular that which must, unless carried forward to the a sum equal to that of the import levy must following marketing year, be exported to be paid. non-member countries.

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13. It therefore perfectly lawfully took in order to discover, according to British action, through its commercial agents, to Sugar, whether it might export C sugar find outlets for its excess quantities of before it had actually produced a quantity sugar. of sugar in excess of the sum of its A and B quotas.

15. This was not the first time that British 18. The fact remains that British Sugar Sugar had exported C sugar, since it had obtained the licences for which it had happened before that its total production applied whereas, under Article 4 of Com- exceeded the quantity equivalent to its A mission Regulation (EEC) No 2630/81 of and B quotas. However, it had always 19 September 1981 on special detailed rules exported its C sugar after it had actually for the application of the system of import produced a quantity in excess of its quotas. and export licences in the sugar sector,3 '[a]n export licence for C sugar ... may be issued only after the manufacturer in ques- tion has provided the competent body with proof that the quantity for which the licence is requested, or an equivalent quan- 16. Nevertheless, during the fourth quarter tity, has actually been produced in excess of of 1992, British Sugar made contact with the A and B quotas of the undertaking the Intervention Board for Agricultural concerned, account being taken ... of any Produce ('IBAP'), the competent interven- quantities carried forward to the marketing tion agency for the purposes of the basic year in question'. regulation, and with the Ministry of Agri- culture, Fisheries and Food ('MAFF'), which in turn consulted the Commission, 3 — OJ 1981 L 258, p. 16.

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19. Making use of those licences, British 7 January 1993, British Sugar could not Sugar had, by 7 January 1993, the date on export C sugar. which the quantities of sugar actually produced in its factories reached the ton- nage equivalent to the sum of its A and B quotas, in fact exported 16 650.465 tonnes of sugar.

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amounting to 16 650.465 tonnes, must be disposed of on the internal market, the considered to be C sugar. Member State concerned is to impose:

a charge equal to the sum of: 27. If the quantity of sugar incorrectly presented as C sugar is added to the quantity equivalent to the sum of the A and B quotas, it must necessarily be found (a) for C sugar, per 100 kilograms: that sugar was produced in excess of quota.

— the highest import levy per 100 kilograms of white or raw sugar, as 28. Since British Sugar did not put the the case may be, applicable during quantity equivalent to that excess to one of the period comprising the market- the uses authorised by the Community ing year during which the sugar in legislation — namely, being carried for- question was produced and the six ward to the following marketing year or months following that marketing exported out of the Community — that year, quantity must, according to IBAP, be deemed to be C sugar disposed of on the Community market. and

29. Such a disposal must give rise to — ECU 1.25.' application of Article 3(1) of Commission Regulation (EEC) No 2670/81 of 14 September 1981 laying down detailed implementing rules in respect of sugar production in excess of the quota, 4 in 30. Following that line of reasoning, in accordance with which: 1997 IBAP demanded that British Sugar should pay the sum of GBP 6 641 608.10. British Sugar denies that it owes that charge.

36. The latter, considering that resolution of the dispute depended on the answer to questions of the interpretation and validity 33. It has also maintained that, if such of certain provisions of Community law, reclassification were possible, it must itself referred to the Court of Justice for a be authorised to make a retrospective preliminary ruling a whole series of ques- application for the export refunds which tions which I need not at the beginning set it would have been able to claim if the out in detail, in so far as many of them are sugar which it exported as C sugar had raised only in response to the answer which been described as quota sugar, despite the the Court gives to another question, but fact that neither Commission Regulation which in essence deal with four points. (EEC) No 3665/87 of 27 November 1987 laying down common detailed rules for the application of the system of export refunds on agricultural products 5 nor, moreover, any other provision of Community legis- lation, authorises national authorities to 37. The national court wishes to know accept a retrospective declaration for those refunds.

•— whether an undertaking may purport 34. According to British Sugar's calcu- to have C sugar available for export in lations, the amount of the refunds which the course of a marketing year when it has not yet produced a volume of sugar in excess of the sum of its A and B 5 —OJ 1987 L 351, p. 1. quotas;

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The first question

38. The first question asked by the national 41. If, with regard to the availability of C court indubitably calls for an answer. It is sugar, it introduced a condition which is worded as follows: inadmissible in the light of the basic

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r e g u l a t i o n , and in p a r t i c u l a r of 45. Let me first of all point out that that Article 24(1)(c) thereof, it would, which provision does not expressly sequence the the national court has most aptly perceived, production of the various categories of as shown by the question it asks in the sugar. The only unit of time to which it event of receiving an affirmative answer to refers is the marketing year. Having regard the first question, have to be considered to the fact that, as British Sugar has void. observed, sugar is a homogeneous com- modity and that nothing therefore physi- cally distinguishes the A, B and C cat- egories at the end of the marketing year, an undertaking's production is divided between those three categories by means of a series of arithmetical operations. If an undertaking has produced a quantity less 42. In other words, a Commission imple- than its A quota, then it has produced only menting regulation cannot be relied upon A sugar; if it has produced quantities as a means of interpreting the basic regu- greater than its A quota, that means that lation, since the Commission's interpre- it has also produced B sugar, and if it has tation of a Council regulation, even though produced a quantity in excess of the sum of very rarely incorrect, is not to be regarded its A and B quotas, then it has produced C as authoritative. sugar. The quantity of C sugar produced is therefore obtained by subtracting the sum of its A and B quotas from its total production.

48. Taking into consideration the signifi- cant consequences attaching, under the system of the common organisation of the 51. It is unimaginable that, in the light of markets in the sugar sector, to an under- the separate regimes applying to the dif- taking's classification of the sugar it has ferent categories of sugar, the Council produced, in particular with regard to the would have been able to permit undertak- levies payable by producers in order to ings to place their production, in bad faith ensure that the common organisation is but scot-free, under the regime which self-financing and to guarantee the con- offered them the greatest advantages at a ditions under which sugar is exported, it given time. To allow such conduct would seems to me impossible to allow a producer have made it impossible for the various and to rely on the estimates he makes as to the highly complex mechanisms, the disposi- total quantity of sugar that he expects to tion of which constitutes the common produce by the end of the marketing year in organisation of the market, to function. order to classify at his own convenience, that is to say, more or less arbitrarily, as A, B or C sugar some of the sugar which he has actually produced at a given point in time. 52. Those considerations seem to me to be sufficient to support the conclusion that Article 24(1 )(c) of the basic regulation by implication lays down a chronological sequencing of production and, therefore, of the availability of the various categories 49. Admittedly, it cannot be argued that it of sugar produced by a given undertaking. would have been impossible to afford producers that latitude. The Council could perfectly well have drafted the regulation otherwise than as it did, and provided that, in so far as he judges himself to be in a position actually to produce a quantity of sugar in excess of the sum of his A and B 53. Confirmation of the existence of such quotas, a producer is entitled at any time chronological sequencing could be found, if during the marketing year to place some of need be, in the recitals in the preamble to his sugar under the legal rules applicable to Council Regulation (EEC) No 192/82 of C sugar. 26 January 1982 amending Regulation

55. Many further points have been made by the United Kingdom and French Gov- ernments in support of the argument that there can be no question of an undertaking placing part of its production under the C sugar regime before it has produced a 59. Furthermore, even if those consider- quantity of sugar equivalent to the sum of ations are correct, they do not appear to me its A and B quotas. to be conclusive, or in any event they appear less persuasive than the information which we can deduce from a close reading of Article 24(1 )(c) of the basic regulation. They are predicated on there being con- sistency between the various mechanisms of 56. I shall not set them out here, for two the common organisation, and therefore reasons. involve lengthy arguments which I am unwilling to tackle, inasmuch as they would only serve to support an approach which I believe I have sufficiently demon- strated to be compelling. 57. First, they vary considerably in the degree to which they are relevant. For example, it seems to me unconvincing to claim that, if C sugar could be exported before production equivalent to the A and

60. The conclusion I have reached as 7 —OJ 1982 L 21, p. 1. regards the first question allows me to pass

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straight to consideration of the third and (c) the principle of non-discrimi- fourth questions, which are closely con- nation; nected to the first, the second question arising only in the event of the answer to the first being one which I have specifically rejected. (d) the principle of proportionality;

BRITISH SUGAR

cretion in the light, in particular, of sent by British Sugar to Mr Liikanen, a the circumstances of this case? member of the Commission, on 30 May 1997, which is included among the docu- ments in the case before the national court, the undertaking states that:

(c) If the answer to Question 4(a) is "no", is Article 3(1) of Regulation 'To date, we have not met anyone in a 2670/81 void to the extent that it position of responsibility who disagrees requires a national authority to with the following key points: levy a charge even when the amount of sugar disposed of on the internal market does not, in practice, exceed the sum of the relevant manufacturer's A and B The classification of this particular sugar quotas?' was a mistake which should not have been made by a company of our size and experience'.

64. I therefore consider it to have been 62. Let me first consider, as the national established that British Sugar acted in court requests the Court, whether the mere contravention of the Community rules fact of seeking to impose a charge on and that it acknowledges that, on the most British Sugar, regardless of its exact favourable construction, that contraven- amount, pursuant to Article 3 of Regu- tion is the outcome of a mistake which it lation No 2670/81, amounts to breach of ought never to have made. one of the general principles listed in the order for reference, in light of the circum- stances of the case.

65. That finding seems to me more than sufficient to exclude any possibility that the imposition of a penalty as a result of those contraventions could amount to breach of the principle of protection of legitimate 63. Those circumstances have been expectations. described above, and I shall not go back over them, save to state that the exports made by British Sugar before 7 January 1993 could in no way be regarded as exports of C sugar, whatever the docu- 66. If British Sugar ought to have been ments relating thereto may have indicated, aware that it had not acted in compliance and to point out that, in correspondence with the Community legislation, since in

72. It is therefore to no avail for British Sugar to seek to rely on the fact that it did 69. The fact that IBAP reclassified the not dispose of more sugar on the Commu- exports in dispute, which had the auto- nity market than its A and B quotas matic effect of laying British Sugar open to allowed for in order to appear to be the penalties did, it is true, cause damage to victim of discrimination. that undertaking but there is, to my mind, no justification for the party committing the contravention to complain that in the 8 — Case C-161/96 Südzucker [1998] ECR I-281.

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73. In the light of Sïidzucker, it seem to me and British Sugar cannot rely on any equally fruitless to plead the principle of circumstances entirely outside its control. proportionality.

76. British Sugar has not denied that, from the time it was established that the exports 80. Like any other provision of secondary in issue involved quota sugar, examination Community legislation, Article 3 must be of the attribution of the sugar produced by interpreted, and therefore applied, in com- British Sugar during the 1991/92 marketing pliance with the rules of law which rank year reveals a quantity of C sugar which higher than it, which obviously include was neither carried forward nor exported, general legal principles.

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81. Having regard to the facts of the case, it say its negligence, which alone appeared to seems to me that we must contemplate be the source of the irregularity since in taking into consideration the principle of that case the undertaking would have only proportionality. itself to blame.

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88. However, perhaps too IBAP's conduct The fifth question does not lend itself to being classified as mere negligence but must be regarded as actually wrongful. If such were to be the case, it seems to me that there would be scope for the application of the principle of proportionality, not to relieve British Sugar 91. The fifth question asked of the Court is of all payment, but to vary the amount it worded as follows: has to pay.

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Such total amount shall be paid by the 97. In its view, such circumstances might manufacturers in question before 20 May arise from organised fraud by the under- of the same year.' taking concerned, concealing the disposal of C sugar on the Community market, or where it is impossible for the national intervention body to calculate the amount payable, for lack of available information essential to that calculation. 93. It is not in dispute between the parties in the main proceedings that it was by letter addressed to it on 19 May 1997 that British Sugar was sent an invoice by IBAP for the sum of GBP 6 641 608.10, an amount calculated on the basis of a quantity of C sugar neither carried forward nor exported 98. British Sugar argues that in this case, of 16 650.465 tonnes. however, IBAP cannot claim that the circumstances are exceptional, so that the late presentation of the invoice relieved it of the obligation to pay the charge levied on it.

94. It has also been established that it was at a meeting held on 29 September 1994 that IBAP informed British Sugar that it would find it necessary to apply the provi- sions of Article 3 of Regulation No 2670/81 99. In addition, British Sugar is at a loss to to British Sugar. see how it is possible to interpret Article 3 of Regulation No 2670/81 as meaning that the national invention body has no dis- cretion in determining the amount of the charge to be paid by the undertaking which has disposed of C sugar on the Community 95. British Sugar acknowledges that IBAP market, but that that same body is not informed it at the beginning of November required to observe the deadline set by that 1996 that the amount to be claimed from it same provision. exceeded GBP 6 million.

report on the scrutiny visits paid to British irregularities disclosed by the investigation Sugar between 26 October and 2 December of British Sugar carried out in the third 1993. quarter of 1993, had made its own inves- tigations, using its anti-fraud unit (Unité coordination de la lutte anti-fraude, 'UCLAF') and did not consider itself suffi- ciently well-informed to be able to take up 101. Since that report led the customs a position until July 1996. authorities to open an investigation in order to ascertain whether any fraud had been committed by the undertaking in relation to the monetary compensatory amounts for which exports of A sugar made before 1 January 1993 would have 105. Once it was established in principle been liable, IBAP had to wait for the result that Article 3 of Regulation No 2670/81 of that investigation before taking any had to be applied to British Sugar, several action whatsoever in respect of the appli- more months of discussions were needed in cation of Article 3 of Regulation order to determine the exact amount for No 2670/81. which it was liable, so that the invoice could not in fact have been sent to it before May 1997.

108. The Commission accordingly suggests 111. I shall merely observe that if the that the answer to the fifth question should Court's case-law has classified certain time- be that 'Article 3(2) of Regulation limits fixed by regulations concerning the No 2670/81 does not preclude the auth- common organisation of markets, and in orities of a Member State from imposing a particular by the basic regulation relating charge after the dates mentioned in that to the common organisation of the markets provision, where the irregularity concerned in the sugar sector, as not being absolute, 10 did not come to light in good time.' that classification has always been the result of very close scrutiny of the reason for the period in issue and of the con- sequences for the traders in the sector concerned, favourable or otherwise, which 109. To my mind, that answer could just as might result from failure to comply with well have been proposed by British Sugar, the time-limit. subject to the reservation that that under- taking, with a view to ensuring that the national court should receive an answer of immediate usefulness in resolving the dis- pute before it, would have added that in the circumstances of the case there can be no justification for failure to comply with the 112. In the case of the prescribed period in time-limit. I would note that the national issue, I am inclined to consider that it was court is not asking the Court to rule on not fixed without regard being had to whether it was permissible in principle for concerns for legal certainty. the decision to be adopted after the time- limit had passed but on whether it was permissible in the actual circumstances to send the invoice on 19 May 1997, when the time-limit, as set by the terms of the provision in question, expired on 30 April 113. In any event a time-limit must, of its 1994. very nature, be respected and even if in the light of a number of considerations, such as those put forward by the Commission, I cannot quite bring myself to call it abso- lute, it seems to me that there can be no 110. I need not therefore deal with the question of systematically giving authori- question whether the time-limit laid down sation every time it is exceeded. by Article 3(2) of Regulation No 2670/81 is

121. Nor is it inconceivable that the trader himself should have acted outside the periods prescribed, but that it should still 117. It must still be possible to penalise be necessary in the light of the circum- fraud discovered within a reasonable stances in which his operations took place period, having regard to the artfulness to consider whether it might not be necess- involved, even if the period prescribed to ary to acknowledge that the conditions that end by the rules has expired, so long as defining force majeure have been satisfied. many years have not elapsed between the fraud and its discovery. Let it be borne in mind that in criminal law there are gen- erally time-limits on the prosecution of even the most heinous crimes. 122. In all those cases, which are certainly not exhaustive, the fact that the interven- tion body delays the decision and its notification is in fact in the interest, properly understood, of the traders and to 118. It also seems to me to be imperative, my mind there can be no question of quite apart from cases of fraud orchestrated treating a late decision as invalid, provided by the trader, for it to be permissible for the that the delay in its adoption remains intervention body not to act within the within the bounds of the reasonable. If

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the approach I propose is followed, what exportation on the basis of the licences it conclusion will be reached in this instance? had issued and that it authorised the release of the securities which British Sugar had had to lodge.

128. In a word, if British Sugar has at the very least displayed carelessness in believ- ing itself authorised to export C sugar before 7 January 1993, IBAP has displayed 125. I am even tempted to say that it was to just as much carelessness in the perform- the full knowledge of IBAP that British ance of its supervisory duties. Sugar exported sugar which was not C sugar. I would point out that IBAP is always duly informed of British Sugar's production figures, that it received an application for the issue of export licences for C sugar which did not contain proof of 129. Let us, however, suppose for the the production of the required amount of moment that IBAP was unable to discover quota sugar, that it was told that the the existence of irregular operations in the required production of quota sugar was export of C sugar by British Sugar until the achieved on 7 January 1993, that it end of 1993, that is to say, when the report received in return documents attesting to of the scrutiny visits during the last quarter both the date and the actual fact of of 1993 was drawn up.

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130. IBAP then had four months to draw been committed, prevented IBAP from the appropriate conclusions from those drawing the appropriate administrative irregularities and cannot now take refuge conclusions from irregularities the exist- behind the fact that it could not carry out ence of which was beyond dispute. the calculations to determine the amount for which British Sugar was to be declared liable.

135. Given that it was perfectly well aware of all the operations carried out by British 131. It had available to it all the documents Sugar throughout the marketing year, it necessary to establish very precisely how was in a position to establish for itself the much A sugar had been exported as C quantity of C sugar neither carried forward sugar, and thus how much sugar which was nor exported which must be used to actually C sugar had been disposed of on calculate the charge payable by the trader the Community market, or was still stored, under Article 3 of Regulation No 2670/81. by British Sugar.

140. The United Kingdom Government 143. Such a step would have been perfectly argues, however, that if the decision was justified and would have protected at one adopted so belatedly, that was essentially and the same time the interests of IBAP, because British Sugar asked IBAP to negoti- British Sugar and the Community. ate with the Commission and reach an agreement with it as to a moderate penalty.

144. Instead, IBAP chose a wait-and-see policy and put back adopting the decision 141. British Sugar is not therefore, in that imposing a penalty on British Sugar beyond Government's view, entitled to plead the what was reasonable, taking little account lateness of a decision which was delayed in of the requirements of legal certainty. its own interests. I do not for a single moment doubt that IBAP attempted to play the role of honest broker between British Sugar and the Commission, and not with- out success, since it seems that at one time the Commission was of the opinion that an even greater penalty should be imposed on 145. For those reasons I propose that the British Sugar. Court should reply to the national court that, in the light of the circumstances of the case before it, the undertaking is relieved of any obligation to pay the charge demanded of it.

142. But there was in point of fact nothing to prevent IBAP, during the period pre- scribed, from applying Article 3 as it inter- preted that provision in the exercise of its 146. Although the answer I propose to the own responsibility. It could perfectly well fifth question seems to me to be capable on have imposed immediately on British its own of providing the national court Sugar, as a provisional measure, the penalty with the outcome of the dispute which it fixed by that provision, while approaching has to resolve, I shall deal briefly with the the Commission to ascertain whether the sixth question.

(b) a refusal to pay such export refunds would constitute a breach of the prin- ciples of the protection of legitimate 151. There is nothing to support the argu- expectations and/or legal certainty ment that, if the quantities for which and/or proportionality and/or proper British Sugar now seeks refunds had in fact use of powers?' been recorded at the time of actual export

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as having to be exported with a refund, the 155. First of all, it is to my mind clear that level of refund would have been what it a sugar manufacturer may not purport to was, since the past cannot be relived. dispose of C sugar so long as it has not yet produced more than the sum of its A and B quotas. British Sugar has therefore not complied with the Community legislation. This must, I believe, be pointed out in any event to the national court.

152. I do not wish even to contemplate here the headache of calculating the production levies which would retrospec- tively prove necessary in order to finance those refunds. The 1992/93 marketing year has been definitively closed and it is incon- ceivable that its balance-sheet should be 156. Next, however, given the conclusion I redrawn in order to save British Sugar have reached in respect of the fifth ques- having to bear losses which, need I point it tion, that British Sugar must be relieved of out, are simply the consequence of its own all payment because of the significant delay negligence, and cannot be attributed to any in the adoption of IBAP's decision to event amounting to force majeure. penalise it, it seems to me, if the Court follows me on this point, that there is no need to answer the third, fourth and sixth questions, which I have considered with a view to comprehensiveness.

— in the circumstances of this case, the national authority is prevented from levying a charge pursuant to Article 3(1) of Commission Regulation (EEC) No 2670/81 of 14 September 1981 laying down detailed implementing rules in respect of sugar production in excess of the quota, since it has not acted within a period of time compatible with the requirements of Community law;

and, if an answer must be given to the third, fourth and sixth questions, that:

— where a national authority claims that sugar exported as C sugar was A or B sugar and/or where it seeks to impose a charge pursuant to Article 3 of Regulation No 2670/81 for failure to dispose of C sugar outside the

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Community, it is not in breach of the principle of protection of legitimate expectations or of the principle of equal treatment or of the principle of proportionality or the principle of the proper use of powers;