JUDGMENT OF 26.1.1978 — JOINED CASES 44 TO 51/77 UNION MALT v COMMISSION

In Joined Cases 44 to 51/77

THE COURT composed of: H. Kutscher, President, M. Sørensen and G. Bosco (Presidents of Chambers), A. M. Donner, P. Pescatore, Lord Mackenzie Stuart and A. O'Keeffe, Judges, Advocate General: H. Mayras Registrar: A. Van Houtte

gives the following

JUDGMENT

Facts and issues

The facts and the arguments of the parties put forward in the course of the written procedure may be summarized as follows:

I — Facts and written procedure

1. Malt obtained from barley (tariff heading 11.07 A II (b) of the Common Customs Tariff), an agricultural product derived from barley (processing coefficient 1.33), is subject to the common organization of the market in cereals set up by Regulation No 120/67 of the Council of 13 June 1967 (OJ, English Special Edition 1967, p. 33), replaced since 1 November 1967 by Regulation No 2727/75 of the Council of 29 October 1975 (OJ 1975, L 281, p. 1). So that those products may be exported outside the Community that organization provides for the grant of a refund covering the difference between prices on the Community market and rates or prices on the world market. For products such as malt which are produced by the processing cereals, the amount of the refund is fixed each month in accordance with the Management Committee procedure provided for in Article 25 of Regulation No 2727/75 although it may be modified by the Commission in the intervening period in the light of the situation in the market. Furthermore, the export of malt out of the Community is subject to production of an export licence, the issue of which is conditional upon the lodging of security. The obligation to export is regarded as discharged when the quantity exported is a maximum of 7 % lower than the quantity indicated in the licence. Regulation No 2042/75 (OJ 1975, L 213) fixes the period of validity of the export licence for malt af 11 months, plus the month of issue of the licence. Finally, in accordance with Article 16 (4) of Regulation No 2727/75 the refund may be fixed in advance when the export licence is issued.

2. Within the context of that system the Community rules also provided that in respect of certain products, including malt and barley, the refunds could be paid in advance, subject to certain conditions, before the product actually leaves the geographical territory of the Community and, in the case of processed products, even before processing takes place. To that end, Regulation No 441/69 of the Council of 4 March 1969 (OJ, English Special Edition 1969 (I), p. 91), set up (in Articles 2 and 3) two systems for advance payment, by providing for the product to be placed under the bonded warehouse procedure ‘for the export of unprocessed goods’ or under the procedure ‘for processing products under customs control’. The detailed rules for the implementation of those systems are laid down by Regulation No 1957/69 of the Commission of 30 September 1969 (OJ, English Special Edition 1969 (II), p. 417). The bonded warehouse procedure for the export of unprocessed goods is only applied to the products referred to in Annex II to the same regulation, which includes malt. The procedure consist in placing under customs control, in premises specially approved by the customs authorities, a certain quantity of malt, for which the export licence is discharged. The declarations by which the products are brought under one of the procedures may be made by the trader concerned at any time, even on the last day of validity of the licence. The refund is paid as soon as the products are placed under customs control, subject to their being actually exported out of the geographical territory of the Community unprocessed or within certain time-limits. That procedure provides for the lodging of security guaranteeing the repayment of the refund paid, increased by 20 % if, (in the absence of force majeure, the products in question have not actually left the geographical territory of the Community within the prescribed time-limits. The maximum period fixed by Regulation No 1957/69 was six months from the date on which the products were placed under customs control, which, in an extreme case, gave a dealer a maximum period for the performance of an export agreement of 18 months (11 + 1 + 6). The bonded warehouse procedure for processing products under customs control, also known as the ‘pre-financing’ procedure, is only applied to basic products which are exported in the form of the processed products listed in Annex I to the regulation, including malt. It consists — as regards malt — in placing under customs control a certain quantity of barley which must be shown to be actually in the factory. When they receive the declaration that the products have been placed in a warehouse the customs authorities discharge the malt export licence for a quantity equal to the quantity of barley in the factory, as divided by a processing coefficient which, in this instance, is 1.33. The refund applicable to the product to be exported is paid as soon as the basic product is placed under the customs control procedure. The amount of the refund is that applicable not to the basic product used but to the processed product, in the form in which it is to be exported. The conditions for payment and for provision of the security are similar to those applicable to the bonded warehouse procedure for unprocessed products. Unlike the bonded warehouse procedure for unprocessed products, the maximum duration of the period under customs control for products subject to an export licence was limited by the aforementioned regulation to the remaining period of validity of the licence at the date on which the products were brought under customs control. However, if such remaining period were less than three months, the period under customs control was increased to three months. In an extreme case that allowed a dealer a maximum period for the performance of an agreement of 15 months (11 + 1+3).

3. By means of Regulation No 413/76 of 25 February 1976 (OJ 1976, L 50, p. 18) the Commission made certain modifications to the aforementioned procedure. In particular, it reduced the period during which certain cereal products, — inter alia the products in dispute — may remain under the aforementioned customs procedure which provides for the refunds to be paid in advance. As regards the bonded warehouse procedure for unprocessed goods Article 2 of Regulation No 413/76 provides that in the case of products falling within tariff heading No 11.07 of the Common Customs Tariff, that period under customs control shall be reduced to the period of validity of the export licence which is outstanding on the date on which the products become subject to the customs control in question, where such period of validity is less than six months. Where the application of that provision leads to a period under customs control of less than one month, such period shall be increased to one month. In the case of the bonded warehouse procedure for processing products under customs control the period during which the products may remain under customs control remains unchanged, that is to say, it continues to be the outstanding period of validity of the export licence. The second paragraph of Article 1 of the regulation states, however, that were the application of that rule leads to a period under customs control of less than one month, that period shall be increased to one month. Thus, the maximum period which could possibly be available to maltsters for the performance of an export agreement is carried by Regulation No 413/76 to the end of the twelfth month. In accordance with the terms of Article 3, Regulation No 413/76 entered into force on the seventh day following its publication in the Official Journal, that is to say, on 4 March 1976. The second paragraph of that provision provides that the regulation shall not apply to products which, before its entry into force, were placed under one of the systems for advance payment of refunds instituted by Regulation (EEC) No 441/69.

4. The applicant undertakings are variously involved in the production, storage, preservation and processing of malt and in trade in that product. In June/July 1975, having lodged security, they obtained export licences with advance fixing of the refund for the export outside the Community of certain quantities of malt. In accordance with agreements finally concluded on different dates those exports were to take place before the date of adoption of Regulation No 413/76 (25 February 1976). As the applicants considered that they were adversely affected, as regard those agreements, by the entry into force of that regulation, they lodged claims for damages under the second paragraph of Article 215 of the EEC Treaty on 18 April 1977.

5. By order of 13 May 1977 the Court decided in pursuance of Article 43 of the Rules of Procedure to join the present cases for the purposes of the procedure and judgment. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without holding any preliminary inquiry and to limit the first stage of that procedure to a discussion of existence of a wrongful act on the part of the Commission such as to impose on it a liability towards the applicants.

II — Conclusions of the parties

Each applicant claims that the Court should:

‘— Declare its application based on the extra-contractual liability of the Commission admissible and well founded and, in allowing it; — Order the Commission of the European Communities to pay to it by way of damages the sum of FF… subject to increase in the course of the proceedings with interest on that sum at the discount rate of the Banque de France as from the date on which the present application was lodged; — Order it to pay all the costs.’

The amount of damages claimed on that ground by the applicants is:

FF 927330.48 in Case 44/77;

FF 1447120.25 in Case 45/77;

FF 703645.99 in Case 46/77

FF 354546.73 by the Société des Établissements J. Soufflet and

FF 274152 by the Société La Providence Agricole in Case 47/77;

FF 6058585.51 in Case 48/77;

FF 2802934.87 by the Société Malteries Chevalier Martin and

FF 53924.20 by the Société Union Champagne Malt in Case 49/77;

FF 4197444.00 in Case 50/77;

FF 125025.20 in Case 51/77.

The defendant contends that the Court should:

‘(1) Dismiss the application brought by the applicants as unfounded; (2) Order the applicants to pay the costs.’

III — Submissions and arguments of the parties

The applicants explain, first, that contracts between maltsters and brewers are in the main concluded between May and October of each year and that deliveries of the product take place between October-November of the same year and October-November, or even December, of the following year. The lapse of time between the placing of the order and the beginning of the deliveries, as well as the duration of the contracts, is explained by reasons which are both economic and technical in nature and concern the sector in question:

The brewers make their purchases at the time which they consider to be favourable, that is to say, on the basis of the short-term economic situation and the foreseeable trend of the world market in barley. Those factors are influenced not only by the export policy for barley produced in the EEC but also by the offers made by the third countries which are large exporters of barley and producers of malt. The malt is purchased on the basis of offers for sale open for three weeks to one month, or even more.

The barley harvests are not all alike. The biological characteristics of the barley from a given harvest, which are decisive for carrying out the malting process and render it possible for particular standards to be attained, are known only after the end of the ‘dormancy’ and it is only at the end of September or beginning of October that all the potential characteristics of the newly-harvested barley are ‘revived’.

It is at precisely that period that the individual conditions of sale are drawn up between brewers and maltsters, who are people in the same line of business. For the brewer the conditions of sale drawn up with a maltster, for example, in Europe, take account of the potential characteristics of the barley available in Europe. His ultimate aim is to have available during the whole of his brewing year a raw material of a quality as constant as possible. Thus, from a technological point of view, the conditions of sale keep the customer and the supplier with each other for a whole year. It is impossible to change supplier every two, three or four months.

That explains why the existence of a bonded warehouse procedure of six months, in addition to licences valid for 11 months, did not constitute an abnormal privilege and one which was outside the scope of the general law. In fact, the bonded warehouse and prefinancing procedures allowed the four to six months lost between acceptance of the order and commencement of the deliveries to be recouped at the end of the period of validity of the licence. The contractual undertakings are generally entered into for a period of 15 to 18 months, for performance in a period of 12 months. Other factors render it necessary to provide for a period of four to five months for most of the transactions to be finally settled. Apart from the duration of the offers for sale or of the negotiations which a brewer enters into with ‘all’ his customers, it is also necessary to consider the time factor, since approximately 100 countries are customers of the French maltsters and many countries have several groups of breweries. On a formal level a contract entered into sometimes forms the subject of a written document (confirmation) only when all the additional details have been settled. It is for that reason that many confirmations are only subsequently settled, even in November or December.

For those reasons, the maltsters had to and must still take out, at the time the brewers decide to purchase, a number of export licences corresponding to the tonnage which they they usually deal in with them. The refund, which is linked to the licence, must correspond to the level of prices in the world market on which the competitors in third countries are obtaining their supplies at that very moment. That was precisely the case in June/July 1975.

It is in such circumstances that in 1975 the applicants had to negotiate with their customers on the basis of fixed rules providing for periods which exceeded by six months (warehouse procedure for unprocessed goods) and by three months (warehouse procedure for processing the products) the period of validity of the export licence for the issue of which they had provided security.

By reducing this period to one month without providing for any transitional measure for the undertakings being performed by the maltsters and for the export licences issued in June or July 1975, Commission Regulation No 413/76 of 25 February 1976 (Official Journal 1976, L 50, p. 18), which entered into force on 4 March 1976, retroactively and abruptly modified the financial conditions on the basis of which the maltsters had contracted between May and October 1975 for exports to be carried out from September/October 1975 to October/November, or even December, of the following year. The wrongful act of the Commission therefore consists in having abolished with effect from 4 March 1976 the excess periods over and above the period of validity of the export licences obtained by the maltsters in May/June or June/July 1975, without taking account of the fact that certain maltsters, not to say all of them, had obtained such licences and had lodged corresponding securities on the basis of those excess periods.

Whereas when concluding their contracts under the earlier .system the maltsters were able to count on a period for performance which, in the case of export licences issued in June or July 1975, lasted until 30 November or 31 December 1976 respectively for the bonded warehouse procedure for unprocessed goods and not until 31 August or 30 September 1976 respectively for the bonded warehouse procedure for processing products under customs control, under the system established by Regulation No 413/76 those same traders may only count on a period for performance not extending beyond 31 July 1976 for both customs control procedures.

They could certainly have gone on until 3 September 1976, although that possibility was only theoretical since it only existed if the maltsters had sufficient malt available on 3 March 1976 and sufficient stores and since, in any event, it presupposed the agreement of the other party to an amendment of the delivery dates provided for in the contract.

Such a wrongful act on the part of the Commission could only have failed to affect the maltsters adversely if, at the beginning of 1976 and at the latest on 31 July of that year, they had carried out all their exports to the third countries. No one, not even the Commission, could envisage such a possibility.

Even supposing that the maltsters were able to anticipate such a modification, they were and are unable, without suffering injury, to change any of the details and conditions of performance of the contracts already finally concluded. Furthermore, the question of that modification was only submitted to the Management Committee for Cereals for the first time on 6 February 1976 and it had not been previously placed on the agenda.

Therefore, by adopting the aforementioned regulation, the Commission committed a ‘flagrant violation of a superior rule of law for the protection of the individual’, and violated the principle of legal certainty which, in Community law, covers both the principle that laws shall not be retroactive in effect and that the legitimate expectation of traders shall be protected.

To have adhered, in strict conformity with the rules in force, to the excess periods over and above the period of validity of the export licences would not have injured the interests of the Community in any way. Those periods have existed since 1969, they do riot result from any error on the part of the Commission and have given rise to no fraud on the part of traders but have rather satisfied the real conditions and objective requirements of the undertakings entered into by the European maltsters for their exports to third countries. Their abolition cannot, even a posteriori, be justified by any requirement of economic policy of the Community, in whose interest it is that the position on the world market of the European malt market be maintained or even improved as regards third countries. It is futile for the Commission to claim an alleged lack of foresight on its part when it provided for the advance fixing of the refunds at a high level, which applied with their monthly increases to the export licences issued in June/July 1975. If the world prices for barley rose at that period, it is for reasons which are outside the applicants' control (it is in this instance caused by the massive purchases by the Soviet Union from the United States of America). Furthermore, that circumstance could have no effect on the established rights of the European maltsters: it could not authorize the Commission to interfere with those rights, eight months after their acquisition, and to ‘transfer’ the injurious consequences of that lack of foresight to the maltsters.

As a result of the adoption of Regulation No 413/76 the applicants found themselves faced with the following alternatives:

Not to perform part or all of certain contracts and thus to go back on their word as regards their customers; or

To try to obtain a modification of the delivery periods provided for by certain contracts, thereby running the risk of incurring not only the displeasure of their customers but also considerable costs by way of storage, warehousing, demurrage, etc.; or finally

To observe the terms of the contracts, that is to say, to carry out part of the deliveries provided for therein, in accordance with the detailed rules for performance previously agreed with the brewers but after 31 July 1976, with the following financial consequences:

Loss on the difference between the refunds;

Loss on the difference between the compensatory amounts, subject to their possibly being exempted therefrom, though the position remains uncertain to date;

Loss of the securities as a result of the abandonment of certain of their export licences.

Having given the foregoing explanation each applicant determines the nature and the extent of the alleged damage in the light of the elements of fact and law applying to each particular case.

The defendant refers first of all to the legislative context in which the rules in dispute are found. It sets out in detail the essential features of the system for export licences and for the advance fixing of the refund on cereal products such as malt and describes the machinery of the customs procedures introduced by Regulation No 441/69 (Articles 2 and 3), in the context of the advance payment of the refund.

When that regulation was drawn up the Council and the Commission were conscious of the risks of speculation which might result from the application of the systems for the advance payment of the refunds in conjunction with the procedure for fixing the refunds in advance. The combination of those systems could have resulted in unduly delaying the date on which the products were actually exported as compared to the date on which the refund was fixed and, therefore, in allowing those exports to take place under market conditions which bore no relation to the situation in the light of which the applicable refund was fixed.

It is for that purpose that Article 5 of implementing Regulation No 1957/69 of the Commission of 30 September 1969 (Official Journal, English Special Edition 1969 (II), p. 417) provides that: ‘In order to prevent difficulties arising on markets on account of the characteristics of the products or goods’ the time-limits applicable to the two customs procedures ‘may be reduced, for a limited or unlimited period, as circumstances require’. The Commission made use of that provision on two occasions in the milk sector before the adoption of the contested Regulation No 413/76.

That regulation reduced the periods during which barley and malt could remain under the systems for advance payment of refunds set up by Regulation No 441/69, by bringing them into line with the remainder of the period of validity of the export licences at the date on which the products come under customs control. That reduction in the time-limits was based (second recital) on experience of the difficulties which could result for malt from the time-limits applicable at that period.

During the latter months (June and July) of the 1974/75 marketing year export licences covering more that 1.5 million tonnes (metric tons) of malt were taken out, with advance fixing of the overall refund (including the corrective) at between 60 and 70 units of account per tonne. Since actual exports of malt per marketing year amounted to between 700000 and 900000 tonnes there was reason to anticipate the existence at the end of the 1975/76 marketing year of a considerable number of undischarged licences and, therefore, of numerous requests for the goods to be brought under customs control in order to extend the period of validity of the licences and thereby to avoid the threat of loss of the security. That could have meant that, in an extreme case, exports with advance fixing of the refund based on the conditions prevailing in the market in May and June 1975 could still have been carried out in December 1976. Such an extension of the period of validity of the licences issued in June and July 1975, overlapping with the new 1976/77 marketing year, made the proper management of the market in barley particularly difficult.

The advance fixing of the refund for the licences in question took place before the price rise on the world market which occurred at the beginning of July as a result of the unforeseeable ‘Russian purchases’. Following that rise, the Commission on 14 July 1975 lowered the amount of the refund applicable with effect from August from 71.10 units of account per tonne to 17.93 units of account per tonne, although the levies on barley were at that time still above 40 units of account per tonne. At that time, however, the Community malt exporters already held export licences for more than 1.5 million tonnes, together with higher refunds fixed in advance for one year. In the eyes of the Commission the taking out of licences for that massive quantity appeared to be largely speculative, for the following reasons in particular:

1) The amount for which the licences were taken out was almost double the amount of malt exported during the preceding marketing years;

2) A detailed investigation suggests that the licences at issue were taken out without contracts of sale having been concluded for the quantities of malt in question, as is assumed in principle by the advance-fixing system. According to the information supplied to the Commission most of the offers for malt are made to the breweries only when it is possible for the parties concerned to have a clear idea how prices for the annual harvest are settling. As regards barley this can hardly be until after the first fortnight of July. Since three or four weeks normally elapse between the date on which the offer is made and the final conclusion of the contract most of the firm contracts for the new marketing year cannot be signed before 1 August;

3) A comparison of the date on which the export licences were applied for and obtained and the date of conclusion of the contracts shows that the latter took place so much later that the advance fixing of the refund was normally unable to cover the contracts already in existence;

4) Recent experience has shown that the largest number of licences was taken out when the refund had reached its maximum level. Thus, for example, they were taken out during May and June although the prices were not clearly established and it was not yet possible for the delivery contracts for the new marketing year to be concluded.

The result was that by profiting from those refunds the Community malt exporters were able to offer some of their product on the market in third countries at prices which were sometimes below the quotations for barley on the world market. That situation led to massive complaints by competitors in third countries and the Community was increasingly criticized for ‘dumping’. That resulted in difficulties on the Community market, which affected the market in all agricultural products. The danger increased as a result, in particular, of the practical possibility of extending the validity of the licences with advance fixing of the refund by means of the bonded warehouse procedures.

After referring to the other measures introduced first by the Commission and then by the Council in order to ‘improve the system for the grant of licences for malt’, the defendant gives its opinion on the submission put forward by the applicants and refutes the argument that Regulation No 413/76 constituted ‘a flagrant violation of a superior rule of law for the protection of the individual’ embodying the principles that laws shall not be retroactive in effect, that they shall protect legitimate expectation and respect established rights. The defendant states, in particular that:

a) As regards the alleged violation of the principle that laws shall not he retroactive in effect, it is clear from Article 3 that Regulation No 413/76 is not retroactive in its effect. The provisions only apply to situations which arose after its entry into force. The previous rules contained in Regulations Nos 441/69 and 1957/69 continued to apply to the consequences of situations existing earlier (products brought before 5 March 1976 within the system for advance payment of refunds).

b) As regards the principle of respect for established rights the applicants' argument is based on confusion as to the true scope of the two groups of rules in question: those relating to the advance fixing of export refunds (Article 16 (4) of Regulation No 120/67) and those relating to the systems for the advance payment of refunds (Regulations Nos 441/69 and 1957/69). The applicants regarded those two groups of rules as forming an indissoluble whole, in the sense that one is the necessary continuation of the other, with the result that the rights deriving from the issue of licences fixing the refund in advance extend to the application of the systems for the advance payment of refunds. In fact, the procedure for the advance fixing of the refunds and the systems for their advance payment have quite separate aims and they are intended to deal with different situations. In those circumstances, the fact that before the entry into force of Regulation No 413/76 it was possible under the Community rules for exporters of barley and malt to combine the benefit of those two types of system is an indirect consequence of the application of the systems for advance payment of the refunds but does not result from-either their logic or their aims. To make use of the machinery for the advance payment of the refund solely in order to take advantage of the possibility of overrunning the periods in which the export licences must be taken up is to misuse that machinery. In fact, the effect of the issue of export licences involving the advance fixing of the refund is not to fix irrevocably the legal position of the holders of those licences as regards the present or future, possible or real, applicability of all the elements of the Community rules to the commercial transactions concerned. The only rights which the parties may claim are those which they derive from the rules relating to the export licence procedure, that is, the right to collect, in the circumstances provided for by the Community provisions relating to the products in question, the refund fixed in advance, if, before the expiry of the period of validity of the licences, the products are exported or otherwise treated in a manner which is assimilated to exportation. Furthermore, it is a contingent right, which only becomes absolute on satisfaction of a condition, that is on the export of the product. As long as that condition is not satisfied and the right has not become absolute, amendments may be made — as the case-law of the Court of Justice indicates — in particular, if a change takes place in decisive economic factors. For all those reasons, therefore, it cannot be disputed that in the form in which it entered into force Regulation No 413/76 fully respected the established rights of all parties concerned. As regards the holders of valid export licences who, when the regulation came into force, had not yet made use of the opportunity made available by Regulations Nos 441/69 and 1957/69, Regulation No 413/76 does not adversely affect either their right to obtain payment of the refund fixed in advance, if their exports took place during the period of validity of the licence, or their right to make use of one of the systems for advance payment of refunds under the conditions applicable on the day on which the goods are brought under the said procedure. As regards the exporters who had placed their products under a system for advance payment of refunds before the aforementioned date, their rights are also fully preserved by the second paragraph of Article 3 of the said regulation.

c) Finally, as regards the question of respect for legitimate expectation, the arguments which the applicants put forward to support their position are far from proving that in this instance a legitimate expectation existed or that the Commission wrongfully disregarded it.

First of all, the conditions under which the parties took out the licences in June and July 1975 were largely abnormal. As has previously been indicated, those conditions suggest that they were largely taken out for speculative reasons.

Secondly, the applicants are wrong to claim that the amendment of the rules previously in force could not have been anticipated. Nothing in the provisions relating to the advance-fixing of the refunds or in the terms of Regulations Nos 441/69 and 1957/69 could guarantee to the applicants the right to bring their products under one of the procedures introduced by those regulations during the period of validity of the export licences and under the conditions in force when they were issued. On the contrary, it would have been sufficient for them to refer to the express terms of those regulations to discover that it was necessary to consider the possibility that the requirements of those procedures might lead to the withdrawal of that right. Similarly, having regard to the conditions laid down by Articles 2 and 3 of Regulation No 441/69 in relation to products which may be brought within a system for the advance payment of refunds, the applicants had to consider the risk that their products might cease to satisfy those conditions during the period of validity of the export licences and might be withdrawn from the lists annexed to the regulation during the periodic review of those lists provided for in the aforementioned Articles 2 and 3.

The same uncertainty existed as regards the possible duration of the period during which the products may remain under the aforementioned procedure. The possibility referred to expressly in Article 5 of Regulation No 1957/69 of a reduction in the periods during which the goods remain under such a procedure is in fact an element which any normally careful exporter should have taken into consideration in his forecast. Although as regards barley and malt the time-limits provided for by Articles 3 and 4 of Regulation No 1957/69 had never been changed since the entry into force of that regulation, that did not mean that it was impossible for them to be changed but rather that as conditions on the barley and malt market did not appear to be abnormal and likely to lead to disturbances as a result of recourse to the aforementioned procedure the Commission had had no reason to make use of the power provided for in Article 5 of Regulation No 1957/69.

In the circumstances, it was impossible for the Community malt undertakings to have been unaware of the change which took place in the state of the world market in barley and malt from spring 1975, as well as of the difficulties brought about by the commercial policy implemented by the Community malt exporters, whose ‘aggressiveness’ was encouraged by the benefits offered by the grant of the refunds. They could also not have been unaware of the complaints made to the Community against that policy by the competing third countries, the threats of retaliation and the inquiries into the matter undertaken by the Commission.

In any event, the Commission did not fail through the agency of the Secretary-General of ‘Euromalt’ to draw attention in trade circules in the malt industry to the particular difficulties suffered by the world markets in barley and malt from 1975. Thus, as early as October 1975, that is, even before they concluded many of the contracts for the supply of malt, the applicants could have expected measures to be adopted by the Community in order better to adapt the system for the payment of refunds on barley and malt and the conditions of their advance fixing or pre-financing to the actual situation on the world market.

Finally, the applicants can hardly claim that they were not in a position to avoid the consequences of the contested reduction in the periods during which the products could remain under customs control, since when Regulation No 413/76 was adopted, that is to say, on 25 February 1976, the export licences held by the applicants were still valid until the end of May or June 1976, with the result that they had sufficient time available to take the necessary measures to adjust their plans in the light of the new legal situation and to avoid its resulting for them in transactions involving a loss.

Furthermore, it is also necessary to consider whether the interests referred to by the applicant undertakings are genuinely worthy of protection. Those interests derive from the benefits which the Community rules in force in 1975 conferred upon them as regards export refunds. However, the development of the market was such that finally those benefits appeared to bear no relation to the objectives of the common agricultural policy.

The conditions of application of the refund gave the Community exporters of malt an undue advantage over their competitors in the third countries, which was perpetuated by the rules applying to the advance fixing and prefinancing of the refunds to the point where those exporters were able to play a disturbing role on the world markets in barley and malt which directly conflicted with the general interests of the Community.

It follows, therefore, from all those considerations that the applicants wrongly based their action on the existence of an established right. In those circumstances it is not necessary to enter into a discussion of the question relating to the alleged loss, since in any event such a question can only arise in the present cases in relation to a wrongful disregard for the legitimate expectation of the parties concerned. Furthermore, according to the case-law of the Court of Justice in Case 74/74, CNTA ([1975] ECR 533), the loss for which compensation may be paid on that ground does not lie in the consequences of the modification of the previous rules but rather in those which derive from the absence, which is ex hypothesi regarded as wrongful, of transitional measures which for reasons of natural justice are intended to prevent such a modification from weighing too heavily on the parties concerned.

However, the existence of such loss is not proved in this instance. The applicants are in fact seeking to obtain, by way of compensation, sums which are sufficient to put them into the financial position in which they would have been if they had been able to carry out their exports under the conditions existing before the entry into force of Regulation No 413/76; they are therefore seeking compensation for the full measure of their failure to earn a profit and not just for any losses which they may in practice have suffered.

Be that as it may, it would be premature at this stage to examine more closely the figures for the alleged loss.

If the Court were to accept that the Community has incurred liability in this instance it should do so in an interlocutory judgment and allow the Commission the opportunity of giving its opinion later on both the existence and extent of the injury.

In their reply, the applicants observe that in its defence the Commission appears to have avoided an essential problem, that is, whether in this instance an overriding public interest prevented the adoption of transitional measures for the contracts already being implemented. The existence of such an interest cannot be deduced from the fact that, according to the statements made by the Commission, the bases of the systems for the advance fixing and advance payment of the refunds are different.

Although the bases of the systems are not the same, the systems themselves are supplementary, since they both seek to guarantee to traders in the Community equality of treatment with their competitors in third countries.

No one can really dispute that it is on the basis of the bonded warehouse procedures for unprocessed goods or for the processing of goods under customs control, established by Regulations Nos 441/69 and 1957/69, that the maltsters took out their export licences (in this instance, in June/July 1975), with the result that the real nature of their established rights and their legitimate expectation must be considered as at the date of issue of those licences to the applicants and not at the date on which their products were brought under customs control.

Furthermore, the Commission is wrong to complain of the ‘aggressiveness’ of the malsters towards their competitors in third countries as in the light of the pressures put on the malsters by those same countries it was fairer to speak of the aggressiveness of the latter.

The Commission is also unaware of the true facts about the European market in malt and certainly about the French market in malt. The European maltster must provide himself with a sufficient number of export licences before concluding his contract with his brewer customers in third countries.

If the defendant's argument as to the allegedly speculative nature of the market in question were well founded, the question would arise why the Commission allowed the former rules to continue in force for seven consecutive years, thereby conferring established rights on the maltsters. Moreover, certain details of that argument require correction.

Contrary to the statements made by the Commission, the number of export licences issued to the French maltsters never exceeded the exportable balance of their production or, a fortiori, their productive capacity but, on the contrary, faithfully reflected the steady progress over the years. On that point the applicants refer to the development of their productive capacity, expressed in terms of tonnes of malt per year, for the years 1972 to 1978 and compare those figures with the information relating to the licences taken out from 1973 to 1976 and to the quantities exported to third countries from 1972 to 1976.

The picture of the situation in the malt market given by the Commission in its defense (p. 29) is not a true reflection of the real situation. Whereas that picture is based on a cereal marketing year beginning on 1 August and ending on 31 July, a proper picture of the state of the market requires the taking out of the licences to be re-allocated, since they are issued in May/June and July and are in practice used in the following cereal marketing year. It may therefore be seen that in setting out its case on the taking out of the licences the Commission allocates to three marketing years the licences taken out in relation to four marketing years. If that correction is made it will be seen that the amounts referred to by the Commission largely correspond to the figures supplied by the applicants, with the result that, in both cases, a redistribution of the figures is required, since the picture given by the ‘malt-producing’ side is in accordance with the commercial reality.

Similarly, the figures provided by the Commission for exports for the years 1973 to 1975 are incorrect. It is clear both from the public statistics prepared by ‘Euromalt’ and from those given by the trade journal ‘Bios’ that exports to third countries from the Member States of the Community reached more than one million tonnes in 1975. Furthermore, the figures available in the customs statistics show that the Community exported one million tonnes in that same year. Having regard to the fact that for the reasons set out above the taking out of the licences must not be analysed over a period of 12 months but rather over 16 to 18 months of use (August 1975-December 1976), it may be seen that if the aforementioned figure is related to a period of 16 to 18 months it corresponds precisely to the 1500000 tonnes referred to by the Commission. Furthermore, the fact that in 1976 the increase in the productive capacities of the Community and, in particular, of France could result in a level of exports higher than that figure is quite normal.

For that reason, the Commission's ground of complaint relating to the allegedly speculative nature of the applicants' recourse to the system for advance payment of refunds is without real foundation. It is all the more ill founded as:

Since the rise in the world price of barley in July 1975 was neither foreseen nor foreseeable, the European maltsters cannot be accused of having taken out export licences on the basis of the same method of management as in the preceding years as regards the taking out of the licences;

The number of export licences taken out followed year by year the same progression as that of the productive capacity of the European maltsters and their exportable balance;

The figures given by the Commission in relation to both the taking out of the licences and the exports contain errors and lack precision;

If the Commission had considered that the number of licences taken out in June/July 1975 was excessive, it would have taken action then and not eight months later. The Commission therefore incurred liability, since on the basis of an incorrect analysis of the malt market it deliberately caused the European maltsters to incur a loss for which compensation is due.

The applicants then reply to the various objections put forward by the defendant and insist on the irrevocable nature of the undertakings which they had entered into with their customers and on the fact that — in their opinion — the amendment in question took place with immediate effect and without warning.

The adoption of the transitional measures could in no way adversely affect the interests of maltsters in third countries. Even assuming that the grievances expressed by those countries are justified, the Commission could have limited the application of the new regulation to the new 1976/1977 marketing year without adversely affecting performance of the current contracts entered into by the European maltsters for the 1975/1976 marketing year.

In those circumstances, therefore, there is no doubt that no speculative manoeuvre justified the abrogation of the periods for which the goods could remain under customs control after the end of the period of validity of the export licences and that in any event no overriding interest prevented those periods from being maintained in force for the contracts in the course of performance.

The real reason for the adoption of Regulation No 413/76 is, in fact, to be found in the desire of the Commission at the beginning of 1976 to save money, because of the very high level of the refunds awarded in June/July 1975. That is a circumstance which the European maltsters were even less in a position to foresee and provide for in October 1975, since the talks which took place between an official of the Commission and representatives of the German and French maltsters only dealt with the possibility of introducing a new system for the export of malt for the following marketing year and not for the current one.

Finally, as regards the problem of the extent of the loss which they have suffered as a result of the adoption of Regulation No 413/76, the applicants state that they have no objection to the Court's dealing with the question of the liability of the Commission in an interlocutory judgment and leaving the determination of the amount of the loss to an agreement between the parties or, in the absence of such agreement, to a subsequent decision on the part of the Court.

In that context it considers that it is necessary to supplement the information with which the Court has been provided by informing it that:

The French malt industry is probably since 1964/1965 and certainly since 1966/1967 the leading world exporter of malt for brewing with customers in more than 100 countries;

The steady increase in exports by that industry is the result of a number of factors, in particular its industrial investment programme and trading policy;

The Commission itself noticed the special conditions obtaining in the malt market when it stated in the second recital to its Regulation No 1125/77 of 27 May 1977 (Official Journal 1977, L 134, p. 56) that although experience has shown that speculative use may be made of a long period of validity of export licences, nevertheless in accordance with international practice a large proportion of delivery contracts are concluded for at least a year and that ‘in order to enable malt exporters to continue to conclude such contracts, provision should be made for a longer period of validity, provided that certain conditions are fulfilled, in particular as regards the destination of the exports and the period within which the destination must be indicated on the export licence’.

In the rejoinder the Commission goes in greater detail into the argument that the parties concerned could not find in the rules previously in force, looked at from the angle of their objectives, structure and wording, any justification for a legitimate expectation of the maintenance in force, as regards them, of benefits which the new provisions call in question.

First of all, as regards the malsters the fact of applying for and of obtaining in June or July licences fixing the refunds in advance is not a requirement which is strictly inherent in the conditions of conclusion of their supply contracts. Such licences providing for refunds may be one of the factors determining the terms of the contract, but they are not the only one. Those terms also depend on other factors which cannot be known in June/July, since the projected exports are of malt which will be produced from barley from a harvest which, in the light of the climatic conditions of the Community, has a good chance of still being at least partly standing at that period. It is really only with effect from the first fortnight of July that one can begin to form an idea of the prices for the harvested barley of a clearly defined brewing quality. Furthermore, as the malt is intended for the brewing industry, particular quality requirements necessarily influence the prices. In the light of those factors the taking out of the export licences during the months under consideration appears to be premature.

Furthermore, the table relating to the trend of export refunds and export licences for malt granted within the Community since the 1969/1970 barley marketing year shows that the month during which export licences are taken out for the largest quantities of malt is not always June or July but varies from one year to another. During each marketing year that month has always corresponded to the month for which the refund, with the corresponding corrective where appropriate, was the highest.

After giving the reasons why the applicants are mistaken as to the scope of the second recital to Regulation No 1125/77, which is quoted at the end of the reply, the Commission emphasizes that allowing the parties concerned to overrun the periods of validity of the export licences fixing the refund in advance by placing the products in question under the systems for the advance payment of refunds provided for by Regulation No 441/69 is not one of the objectives of the two groups of Community rules at issue, that is, those relating to refunds and their advance fixing and those relating to their advance payment. Those rules have quite distinct objectives and are intended to govern different situations.

Export refunds are not premiums or subsidies granted in order to encourage exports at any price. The export refund is, like the import levy, a regulating factor in trade with third countries, linked to the agricultural prices policy. Its aim is to enable traders to deal at any time on external markets in economic conditions similar to those which prevail there. The, refund only performs its function if it remains adjusted as closely as possible to the developments which take place in the markets: for that reason it varies in accordance with the risks of the current economic situation. In those circumstances it could have been a drawback for exporters to be uncertain of the amount of the refund when they concluded the supply contracts. It is precisely in the light of that drawback that the system for the advance fixing of the refunds was conceived, with the aim of enabling traders to be certain that during the period of validity of the licences the cost of the export will not be affected by changes in the amount of the refund. Regulation No 413/76, which is contested by the applicants, in no way prejudiced the rights and benefits on which the applicants could count under the Community rules relating to those refunds and to the systems for their advance fixing.

The systems for the advance payment of refunds provided for by Regulation No 441/69 satisfied aims of a different type. They are based on the idea of the preference for Community products. When it introduced them the Council intended to avoid a reverse preference in favour of products from third countries, having regard to the establishment, at the same period, of the inward processing arrangements and bonded warehouse systems. In that respect it is sufficient to refer to the grounds for the said regulation.

The procedure systematically followed by the applicants at the time of the events giving rise to the present action produces results which are scarcely in accordance with the objectives of the Community regulations on refunds. The issue in June/July of one year of export licences intended to cover exports taking place over a period extending until November/December of the following year resulted in the application of a refund, fixed during one marketing year, to exports, half of which take place during the marketing year immediately following and half during the marketing year after that. The refund has every chance of no longer bearing any relation to the situation existing in the market at the time it was paid.

The Commission then returns to its arguments relating to the essentialy speculative reasons which appear to have motivated the taking out of the export licences and states that the consideration put forward on that subject do not so much relate to any particular course of conduct adopted by the maltsters of the Community during the year 1975 alone. They apply in a more general way to practices followed as much that year as in preceding years, until the adoption of the amendments to the Community rules made, in particular, by Commission Regulation No 1157/76 of 17 May 1976, replaced by Council Regulation No 1381/76 of 16 June 1976.

Having said that, the Commission observes that if a comparison is made between the quantities of malt for which export licences were issued at the request of the parties concerned and the quantities which were actually exported to third countries, the explanations of the applicants and the statistics which they produce in their reply call for certain further observations.

First of all, the reference periods chosen by the applicants for the different sets of statistics produced vary, with the result that it is difficult to compare the different tables.

Secondly, the statistics provided by the applicants only concern transactions carried out in France. However, in the present state of Community law commercial transactions carried out within the Community may take place in several Member States and it is impossible to isolate in those statistics the precise share in the transactions of one or other State, since the export licences issued in one Member State may be intended to cover commercial transactions carried out in other States. In fact, it is only possible to argue on the basis of overall statistics drawn up for the whole of the Community.

Furthermore, the applicants' criticisms of the picture given by the Commission, based upon a cereal marketing year beginning on 1 August and ending on 31 July, derive from a misunderstanding. In its defence the Commission does not seek to compare the quantities of malt for which export licences were issued with the quantities actually exported subsequently on the basis of those licences. In demonstrating that, in its opinion, the quantities for which the export licences were applied for each year were considerably higher than the quantities of foreseeable exports, the Commission compared the total exports actually carried out by the Community during a given year with the total quantities for which export licences had been sought during the same period, even if they were acquired for exports which were to take place subsequently.

Furthermore, although it is true that the checks carried out by the Commission have shown that the figures given in its defence were inaccurate, nevertheless neither the corrections thus made to those figures nor the statistics to which the applicants refer (‘Euromalt’ and ‘Bios’ statistics) are sufficient to call once again in question the arguments or conclusions of the Commission. It is clear, on the other hand, that the total quantity of malt in respect of which export licences were applied for and issued during each marketing year was always very considerably higher than the total quantity actually exported.

In addition, in replying to the criticism that it did not take action in the face of the speculative and erratic practices to which it refers, the defendant observes that it adopted the measures necessary to avert those practices as soon as the relative stability which for a long time characterized the market in the product in question came to an end and the price variations therefore became more appreciable. It draws attention to those measures and to the relevant regulations which were adopted in 1974 and 1975.

Furthermore, it is unavailing for the applicants to claim that there has been a violation of established rights. The prolonged maintenance in force of a rule cannot create an ‘established right’ simply as a result of its duration. In this instance, the maintenance in force merely signified that, during that period, the application of the systems for the advance payment of refunds had not given rise to any particular difficulties as regards the period during which the goods remain covered by those systems and that there was therefore no need to amend the relevant provisions.

Finally, as regards the complaint that the amendment at issue is all the more contrary to the principle of the protection of legitimate expectation because the European maltsters were unable to foresee its adoption, the Commission insists that the trade circles concerned were already aware of the difficulties encountered by the Community in the malt market and of the fact that the Commission was considering adopting amendments to the system for the export of that product in order to avoid a repetition of the situation which existed in 1975.

In the opinion of the Commission, the applicants could have avoided the difficulties of which they complain if, in accordance with the logic and spirit of the rules relating to the advance fixing of the refunds, they had applied for and obtained the licences at a date close to that on which the firm contracts were concluded with the brewers who were their customers. That such a procedure is possible is shown by the practice now followed since the adoption of the amendment in question. Furthermore, the question arises whether the difficulties encountered by the malt-producing undertakings in the external markets in 1976 are not caused, first of all, by a surplus production capacity and, secondly, by the fact that as a result of the massive deliveries made in 1975 and 1976 their customers had greater stocks of malt available and their demand diminished correspondingly.

Moreover, no overriding public interest prevented the adoption of the amendment in dispute, since the desire of the Commission was not to protect the private interests of the maltsters in third countries but to avoid injury to the interests of other Community producers through the adoption of retaliatory measures taken by those same countries. In addition, the public interest of the Community consists solely in ensuring that the Community rules are applied in accordance with their objective which, in this instance, was to avoid in 1976 the perpetuation of the difficulties encountered in 1975 as a result of the rules in question. If the Commission had provided in Regulation No 413/76 for measures enabling the malt-producing undertakings to continue to use the export licences already obtained by resorting to the systems for the advance payment of refunds as they existed before the adoption of the said regulation, the latter would have lost all practical effect for 12 months.

IV — Oral procedure

The parties submitted oral argument at the hearing on 15 November 1977.

The Advocate General delivered his opinion during the hearing on 15 December 1977.

Decision

1. The present applications, which are brought under the second paragraph of Article 215 of the EEC Treaty, seek an order that the Commission of the European Communities pay damages to the applicants to compensate for the loss which they claim to have suffered as a result of Commission Regulation No 413/76 of 25 February 1976 (Official Journal 1976, L 50, p. 18), which entered into force on 4 March 1976, amending Regulation No 1957/69 of the Commission of 30 September 1969 (Official Journal, English Special Edition 1969 (II), p. 417) concerning the periods during which cereal products such as malt and barley may remain under the bonded warehouse procedures for unprocessed goods and for the processing of goods under customs control brought in by Regulation No 441/69 of the Council of 4 March 1969 (Official Journal, English Special Edition 1969 (I), p. 91).

2. It is established that the products in question are subject to the common organization of the agricultural markets set up by Regulation No 120/67 of the Council, replaced since 1 November 1975 by Regulation No 2727/75 of the Council of 29 October 1975 (Official Journal 1975, L 281, p. 1).

3. As regards trade with third countries, Article 12 of the latter regulation provides that exports from the Community of the products in question shall be subject to the submission of an export licence which, as regards malt, is valid for a period of 11 months from the month following that in which it is issued.

4. In addition, Article 16 (1) of the regulation provides that in order to enable those products to be exported out of the Community the difference between the prices on the Community market and the quotations or prices on the world market may be covered by a refund.

5. Paragraph 4 of the same article provides for the possibility of fixing the refund in advance by stipulating that the refund applicable on the day on which application for the licence is lodged may be applied to an export to be effected during the period of validity of the licence.

6. The Community rules also provide that for certain products, including malt and barley, the refund thus fixed in advance may be paid to Community exporters before the product actually leaves the geographical territory of the Community or, in the case of processed products, even before they are processed.

7. To that end Regulation No 441/69 of the Council provided for the exporter to place the product under customs control before the validity of the export licence expired.

8. It therefore laid down in Articles 2 and 3 two procedures for bringing the product under customs control, first, the procedure for processing the goods under customs control, which applies to basic products intended for export after processing, and, secondly, the bonded warehouse or free zone procedure for products intended for export unprocessed.

9. Regulation No 1957/69 of the Commission, which lays down the detailed rules for the implementation of the aforementioned Regulation No 441/69, fixed at six months the period during which the products or goods could remain under the bonded warehouse or free zone procedure.

10. As regards the procedure for processing the goods under customs control, that regulation limited the period during which the goods might remain in the warehouse, as regards products subject to an export licence, to the ‘remainder’ of the period of validity of that licence ‘at the date on which the basic products came under customs control’ or, if that period is less than three months, to three months.

11. As regards the bonded warehouse procedure for both unprocessed goods and for processing under customs control, Regulation No 413/76 of 25 February 1976, which entered into force on 4 March 1976, reduced those periods by limiting them, as regards certain cereal products such as those at issue, to the period of validity of the export licence which is outstanding on the date on which the products become subject to the customs control, or to one month if the said period is less than one month.

12. The applicants maintain that by reason of several factors of a technical and economic nature connected with the particular features of the market in barley the contractual undertakings entered into by the malt-producing undertakings generally last for 15 to 18 months, for deliveries to be carried out within a period of 12 months.

13. They maintain that the bonded warehouse procedures for unprocessed goods and for processing under customs control, in the form in which they were organized before the entry into force of Regulation No 413/76, enabled the four to six months which generally passed between the placing of the order and the beginning of deliveries to be recouped when the validity of the export licence expired.

14. By reducing to one month the periods by which the period of validity of the export licence could be overrun, without providing for any transitional measure for undertakings finally entered into and in the course of performance when it entered into force, that regulation amended retroactively and in an unforeseeable manner the financial stipulations on the basis of which the undertakings were entered into and thus caused the applicants a loss for which compensation is due.

15. Following the adoption of the amendment the applicants found it impossible to perform fully the aforementioned contracts of sale, thus going back on the decisions adopted with regard to their customers and risking the loss of the securities relating to the unused export licences.

16. In order to avoid that consequence they had either, by carrying out the terms of the contracts, to suffer losses on the difference between the refunds and compensatory amounts applicable or, by attempting to obtain an appropriate modification of certain contracts, to bear considerable expense, such as the costs of storage and of warehousing the goods.

17. The applicants conclude that by adopting Regulation No 413/76 the Commission violated the principles of respect for established rights and for the legitimate expectation of traders as well as the principle that laws shall not be retroactive and thereby flagrantly violated a superior rule of law for the protection of the individual.

18. Such a violation represents in a concrete form a wrongful act of such a nature as to impose a liability on the Community towards the parties concerned.

19. It is first necessary to distinguish the rules relating to the export licences involving advance fixing of the refunds from those relating to the advance payment of the refund fixed in advance, which are covered by Regulation No 413/76.

20. The aim of the rules relating to the advance fixing of the refunds is to enable Community exporters to be certain of the amount of the refund for which they may qualify when the exports under consideration take place, in so far as they are actually carried out before the expiry of the period of validity of the licence.

21. As is shown, in particular, by the second, third and fifth recitals, the system for advance payment of refunds set up by Regulation No 441/69 seeks to ensure, both as regards Community basic products intended for export to third countries after processing and for Community products intended for export unprocessed, equality of treatment with products originating in third countries and allowed to benefit from the inward processing arrangements and from the bonded warehouse or free zone procedures.

22. The grant of such a benefit is not a necessary element of the scheme for the advance fixing of the refunds, since the two groups of rules in question, those dealing with the advance fixing of the refunds and those covering their advance payment, pursue separate aims and cannot be assimilated to one another.

23. Having regard to that distinction, although the holder of an export licence fixing the refund in advance has an established right to receive the refund fixed in advance when the export is carried out, in so far as it actually takes place under the conditions laid down by the Community rules, he cannot acquire from the issue of that licence a right to have the system for advance payment of the refund applied to him in accordance with the rules in force on the day of issue of the licence.

24. In particular, the special objectives of the system for advance payment of refunds and the reason for its existence cannot justify its being used as if its principal aim were to overrun the period of validity of the export licences.

25. The period of validity of those licences is fixed in the context of the relevant rules and may only be amended under the conditions provided for therein, without regard for the rules relating to the advance payment of refunds.

26. It results, in fact, from Annex II to Regulation No 2042/75 of the Commission of 25 July 1975 (Official Journal 1975, L 213, p. 5), which provides that the export licence for malt shall be valid until the end of the eleventh month following its date of issue, even though the period of validity for the other products listed is shorter, that the appropriate place for the special considerations inherent in the particular features of the trade in each product is in the rules relating to the export licences and that those considerations cannot be invoked within the context of the system for advance payment of refunds in order to overrun the period of validity of the export licences fixed by the rules relating thereto.

27. It follows from the foregoing considerations that the complaint relating to violation of established rights put forward by the applicants in relation to the amendment made by Regulation No 314/76 to Regulation No 1957/69 cannot be upheld.

28. In addition, the system introduced by Regulation No 441/69 must be applied in such a way as to prevent, in particular in the case of export licences valid for a long period, the opportunity offered to the exporter but the system from resulting in an excessive advantage, having regard to the need to ensure a balance between Community products and products originating in third countries, and from leading to serious difficulties in trade with third countries.

29. To that end Article 5 of the aforementioned Regulation No 1957/69 provides that ‘In order to prevent difficulties arising on markets on account of the characteristics of the products or goods’ the periods during which the goods may remain under one of the customs control procedures ‘may be reduced, for a limited or unlimited period as circumstances require, in accordance with the procedure laid down in Article 26 of Regulation No 120/67/EEC or in the corresponding articles of the other regulations on the common organization of the markets’.

30. Even before the adoption of Regulation No 413/76 the Commission made use of that provision in the milk sector in Regulation No 2182/69 of 31 October 1969(Journal Officiel 1969, No L 276, p. 50) in order ‘to avoid difficulties in international trade’ and in Regulation No 588/71 of 19 March 1971 (Official Journal, English Special Edition (I), p. 132), under the terms of which it was necessary to reduce the periods during which the products could remain under customs control ‘to match the period of validity of export licences’.

31. It is established that since 1972/1973 the number of export licences taken out for malt with advance fixing of the refund had increased considerably each year and that that increase created difficulties in the market or ‘in the international trade in the products in question’ as a result of the considerable variations in the level of the refund applicable at the same period.

32. As a result of those factors the maintenance in force of the periods during which the products could remain under customs control provided for by Regulation No 1957/69 proved to be no longer compatible with conditions in the malt market.

33. The crisis caused on the same market by the massive purchases by a third country in July 1975 could only increase the difficulties and render it henceforth impossible for the Commission to postpone action to modify the conditions of application of the aforementioned system.

34. The trade circles concerned could not, therefore, be unaware when they negotiated and entered into their undertakings for the year 1975/1976 that in the light of the particular development which had taken place in the malt market since 1972/1973 the maintenance in force of the system for advance payment of the refund, applied in accordance with the time-limit laid down by Regulation No 1957/69, gave rise to very serious difficulties as regards trade with third countries and an increasingly heavy financial burden for the Community.

35. Those circumstances should have made the applicants aware of the possibility that in the light of the conditions on the malt market the Commission might be led during the 1975/1976 cereal year to make use, as regards that product, of the possibility offered by Article 5 of Regulation No 1957/69 of reducing the periods during which the goods may remain under customs control, in order to re-establish a balance between the advance-fixing procedure and the system for advance payment of refunds, in accordance with the state of the market.

36. In fact, on 5 February 1976, the Commission, which considered that it should not interfere with the advance-fixing procedure, presented the Management Committee for cereals provided for in Article 25 of Regulation 2727/75 of the Council with the alternative of reducing either the periods during which the goods remain in the warehouse or the periods of validity of the export licences.

37. In those circumstances the reduction in the periods under customs control adopted by Regulation No 413/76 does not appear to be so unforeseeable as to have adversely affected the legitimate expectation of the traders concerned.

38. Moreover, the Commission cannot be criticized for having failed, when adopting Regulation No 413/76, to provide for transitional measures in favour of the goods for which export licences had been obtained but which were not yet placed under one of the bonded warehouse procedures.

39. According to the first paragraph of Article 3 of the regulation, it entered into force on the seventh day following its publication in the Official Journal of the European Communities.

40. In the particular circumstances to provide for a longer period for its entry into force would have left the regulation without any practical effect.

41. Finally, the second paragraph of Article 3 of the regulation provides that it ‘shall not apply to products which, before its entry into force, were placed under one of the systems for advance payment of refunds instituted by Regulation (EEC) No 441/69’.

42. By that provision the regulation allows goods brought before its entry into force under the bonded warehouse procedures for unprocessed goods or for processing under customs control to continue to benefit from the periods under customs control provided for by Regulation No 1957/69 and is therefore not retroactive in effect.

43. On those grounds it does not appear that when it adopted Regulation No 413/76 the Commission acted in flagrant violation of a superior rule of law for the protection of the individual and thereby imposed a liability of the Community towards the applicants.

44. The applications are therefore dismissed as unfounded.

Costs

45. Under the terms of Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.

46. As the applicants have been unsuccessful in their action they must be ordered to pay the costs.

On those grounds, THE COURT hereby:

1 Dismisses the applications as unfounded;

2 Orders the applicants to pay the costs.