JUDGMENT OF 5. 12 1978 — CASE 14/78 DENKAVIT v COMMISSION
In Case 14/78
THE COURT composed of: H. Kutscher, President, J. Mertens de Wilmars and Lord Mackenzie Stuart (Presidents of Chambers), A. M. Donner, P. Pescatore, M. Sørensen, A. O'Keeffe, G. Bosco and A. Touffait, 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 during the written procedure may be summarized as follows:
I — Facts and procedure
1. Council Directive No 74/63/EEC of 17 December 1973 (Official Journal 1974, L 38, p. 31) fixes maximum permitted levels for undesirable substances and products in feeding-stuffs which are tolerated in those feeding-stuffs only under the conditions set out in the annex to that directive (Article 3). Feeding-stuffs which conform to the provisions of that directive may no longer be subject to any other marketing restrictions as regards the presence of undesirable substances and products (Article 7). However, pursuant to Article 5 of the directive Member States may, if a product not listed in the annex presents a danger to animal or human health, forbid by a immediately applicable measures the presence of that product in feeding-stuffs or fix maximum permitted levels. If the Member State concerned makes use of this power it must advise the other Member States and the Commission without delay of the content of and the reasons for the measure which it has adopted, and Article 5 (2) further provides that: The procedure laid down in Article 10 requires a decision to be taken by the Commission after consulting a Standing Committee for Feeding-stuffs. However, if no opinion is delivered by that Committee or if the Commission proposes to adopt measures which are not in accordance with that opinion it must bring the matter before the Council which shall act by a qualified majority. If the Council has not adopted any measures within 15 days the Commission shall adopt the proposed measures and implement them forthwith, except where the Council has voted by a simple majority against such measures.
‘In accordance with the procedure laid down in Article 10, an immediate decision shall be made as to whether the Annex should be modified. So long as no decision has been made by either the Council or the Commission the Member State may maintain the measures it has implemented’.
2. On 7 September 1976 the Italian Government, in exercise of the power provided by Article 5 of the directive, by an urgent note (biglietto urgente) of the Minister of Health prohibited the marketing of feeding-stuffs containing powdered milk or powdered whey having a nitrate content exceeding 30 and 50 parts per million (milligrammes per kilogramme) respectively. That prohibition caused the detention in September 1976 at the Italian frontier of a delivery of feedings-stuffs by the undertaking Denkavit B.V. to the undertaking Tedeschi and gave rise to an action before the Pretura di Lodi and to a reference to the Court for a preliminary ruling pursuant to Article 177 of the EEC Treaty (Case 5/77, Carlo Tedeschi v Denkavit Commerciale s.r.l. [1977] ECR 1555).
3. The Court in its judgment of 5 October 1977 acknowledged that Article 5 of the above-mentioned directive was valid and, in so far as the prohibition of the marketing of products which did not comply with the criteria laid down by the provisional national measure was concerned, held that: ‘For products coming from other Member States such prohibition on marketing may take the form of a prohibition on importation’. As for the procedure laid down in Article 10 of the directive for the purpose of enabling the Community authorities to supervise the use which Member States make of the power conferred upon them by Article 5, the Court held in its judgment that the said Article 10 was not drafted in such a way as to lead to an indefinite extension of the provisional (national) measure — and is consequently not illegal — because, although it is true that the last sentence of Article 10 prevents the Commission from implementing the proposal rejected by the Council where its proposal has been rejected by the Council and even where, in that case, the latter does not put forward an alternative solution, the Commission still has jurisdiction to issue, in accordance with the procedure laid down in the first subparagraph of Article 10 (4), any other measure which it considers appropriate (paragraphs 51 to 56).
4. In the meantime, in pursuance of Article 10 of the directive, the interim Italian measure was submitted, first to the ‘Standing Committee for Feeding-stuffs’ set up by Council Decision No 70/372/EEC of 20 July 1970 (Official Journal L 170, p. 1) and then to the ‘Scientific Committee for Feeding-stuffs’ set up by Commission Decision No 76/791/EEC of 24 September 1976 (Official Journal L 279, p. 35), for the purpose of providing opinions on scientific and technical questions relating to the nutrition and health of animals in general and on additives, substances and products which might be considered undesirable in feeding-stuffs in particular (Article 2). However, at the date when the present proceedings were commenced these consultations had not resulted in a decision being taken either by the Commission or by the Council on the question whether or not nitrates should be included in the list of undesirable products annexed to Directive No 74/63/EEC.
5. On 9 November 1977 a consignment of feeding-stuffs, of which the potassium nitrate content exceeded the level permitted by the Italian measure and which Denkavit Commerciale, the first applicant in these proceedings, had intended to import once again into Italy from the Netherlands was stopped at the frontier. Since the first applicant was of the opinion that, as a result of the judgment delivered by the Court on 5 October 1977 in Case 5/77, the Commission was under a duty to compel the Italian Government to withdraw the provisional measure adopted on 7 September 1976, it wrote on 23 November 1977 (Annex 12 to the application) to the Commission, formally requiring it to adopt within two months the measures provided for in Article 10 of the directive and in the meantime to require the Italian government to abolish the provisional measure complained of, otherwise it would claim damages. Not having obtained satisfaction it filed an application, together with its vendor Denkavit Nederland B.V., the second applicant, on 3 February 1978 against the Commission based on the second paragraph of Article 215 of the EEC Treaty. In the meantime the Commission on 30 May 1978, while these proceedings were pending, adopted a decision compelling the Italian Government to repeal the contested provisional measure.
6. Upon hearing the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.
II — Conclusions of the parties
The applicants claim that the Court should:
1) Declare that the Commission had acted unlawfully in that it failed to adopt a measure in respect of the Italian State requiring it to revoke the urgent note of 7 September 1976 as regards feeding-stuffs for calves and declare that the retention of the note was unlawful with effect from, principally,7 October 1976 (thirtieth and last day of the period for the emergency procedure under Article 10 of Directive No 74/63/EEC) or, in the alternative,5 November 1977 (thirtieth and last day of the period for the said emergency procedure as from the date on which judgment was delivered in Case 5/77);
2) In any event order the Commission, so as to avoid aggravation of the injury, to take measures urgently on the basis of the combined provisions of Articles 5 and 10 of Directive No 74/63/EEC in order to re-establish the free movement into Italy of feeding-stuffs for calves which is obstructed by the urgent note of 7 September 1976;
3) Consequently order the European Economic Community and, on its behalf, the Commission of the EEC to refund to the applicants by way of compensation for the injury such sums as shall be determined in the course of the proceedings and which are derived:
a) as regards Denkavit Commerciale s.r.l.: from the amount which it had to pay in excess of what was owed (amounting to Lit 2500 per tonne) for all imports of feeding-stuffs into Italy from the time when the Court of Justice declares that the Commission has acted unlawfully in accordance with claim (1).
b) as regards Denkavit Nederland B.V.: from the amount which it had to pay for the transport of the goods refused at the Italian frontier and sent back to the Netherlands and for the additional analyses carried out;
4) Order the Commission to pay the costs of the proceedings.
The defendant contends that the Court should:
Declare that the application is inadmissible;
In the alternative, dismiss the application as unfounded;
Order the applicant to bear the costs.
III — Submissions and arguments of the parties
Admissibility
The defendant takes the view that the application is inadmissible because it is not directed against an act or omission of a Community institution but against an act of a Member State. It relies in this connexion on the judgment of the Court of 2 March 1978 in Joined Cases 12, 18 and 21/77, Debayser SA and Others v Commission of the European Communities [1978] ECR 553.
The applicants in reply rely on the said Debayser judgment (mentioned above) and the judgment of the Court of 5 October 1977 in the above-mentioned Case 5/77, Carlo Tedeschi v Denkavit Commerciale s.r.l., to support the admissibility of their application. If the Court in its judgment of 5 October 1977, which was also concerned with Italian measures relating to the nitrate content in powdered milk or whey, had held that the Italian State had acted illegally, the undertakings which suffered damage would not nave met with any difficulty if they had claimed against that State compensation for the damage suffered, but, since the Court held that the Italian measure was justified, the Italian State cannot be regarded as liable.
It follows that in this particular case, pursuant to Article 5 (2) of Directive No 74/63/EEC and in accordance with the system of the said directive, the Commission bears the whole burden of liability.
The Commission in its rejoinder replies that this may also be a field where private persons do not have any individual rights unless there has been a breach of a superior legal principle, which has not occurred in this case.
The substance
A — The evaluation of the Commission's conduct
In their applications the applicants maintain that the Commission has incurred liability:
1) Principally, in that the Commission failed to carry through the procedure laid down in Articles 5 and 10 of Directive No 74/63/EEC in such a way that it resulted in the Italian Government's being forbidden to maintain in force the measure at issue within 30 days from the date when the urgent note (biglietto urgente) of 7 September 1976 was brought to its notice.
2) In the alternative, in that the Commission did not issue the said prohibition, at least within 30 days from the date of the judgment delivered by the Court of Justice on 5 October 1977 in Case 5/77 (Carlo Tedeschi v Denkavit s.r.l., mentioned above).
The Commission, in its defence, replies that there is no such time-limit as the period of 30 days which the applicants mention. The time-limits laid down in Article 10 of Directive No 74/63/EEC are undoubtedly short but they only apply after the Commission has submitted a draft of the measures to be adopted to the Standing Committee for Feeding-stuffs. In certain cases an unforeseen situation of the kind envisaged by the directive may be swiftly remedied, but in other cases a careful study is necessary, as was the case here. In fact, since the bibliographic research proved to be inadequate for a solution to be reached within the ‘Standing Committee for Feeding-stuffs’, it became necessary to undertake experiments in vivo. The Commission, in order to undertake this kind of work, set up by its Decision of 24 September 1976 (Official Journal L 279, p. 35) a ‘Scientific Committee for Feeding-stuffs’ which did not deliver a final opinion until April 1978. The Commission's prudence must be attributed to its concern to protect human and animal health, even if the price to be paid was an obstacle to the free movement of the product.
The applicants reply that Articles 6 and 9 of Directive No 74/63 lay down a procedure enabling the annex to the said directive to be amended or adapted so as to take account of developments in scientific knowledge, but it is plain that in this case the position is entirely different. The issue in these proceedings is the conduct of the Commission when applying the emergency procedure laid down by Articles 5 and 10 of Directive No 74/63/EEC, which mention an extremely short time-limit, reckoned by the applicants at 30 days. On the other hand, the Court of Justice in paragraph 50 of its decision in the Tedeschi case held in clear terms that when the Commission adopts this procedure it must make an immediate decision, since the aim of the emergency procedure is to restore in the shortest possible time the uniform treatment of a given product within the common market. Consequently, if a Member State asks for the annex to the directive to be amended, so that a new substance may be added to it, that Member State itself must from the very beginning produce the scientific evidence for the restrictive measure which it has just adopted. Furthermore, the ground of protection of public health put forward by the defendant is irrelevant. Since the aim of Directive No 74/63/EEC is to protect public health, not only in Italy but in all the Member States, the Commission should rather be concerned to ascertain whether there are valid grounds for holding that the Italian application to amend the annex is well-founded in relation to the Community as a whole, because something which may injure the Italian consumer may also injure consumers in the other Member States.
The Commission cannot rely on its discretionary power because it was quite impossible to adopt a decision maintaining the Italian measure in force. The levels must in fact differ, the content depending on the animals for the feeding of which the products are intended, and it emerges in fact from Annex I to the Commission's defence that no restriction as to the content was necessary in the case of the feeding-stuffs for calves.
The Commission rejoins that the applicants' reasoning takes no account of the differences of opinion which may arise among experts. To avoid a stalemate, the Commission initially planned to extend the partial or total prohibition on the use of nitrates to the whole of the Community. It took the view that in case of doubt concern for public health had to prevail and that too much protection was better than too little. Since this line of argument was not followed by several Member States, which asked for a more thorough scientific investigation to be undertaken in this field, the Commission at that time considered that it would be better to leave things as they were. Since the Commission was of the opinion that that situation could not lead to an indefinite postponement, it adopted a decision, after having collected a quantity of scientific data, stating that it was unnecessary to amend the annex to Directive No 74/63/EEC and that in consequence the measures adopted by the Italian Government had to be repealed within one month of notification of the said decision.
Finally, as far as the extent of its discretionary power is concerned, the Commission points out that, since the ‘Scientific Committee’ did not finish its work until 19 April 1978, it is wrong to allege that from the month of April 1977 the Commission was convinced that no limitation of the nitrate content of feeding-stuffs for calves was permissible.
B — Compensation of damage
The order applied for
It is the applicants' view that in an action based on non-contractual liability they are entitled to ask the Court, with a view to avoiding aggravation of the damage, to order the Commission to require Italy as a matter of urgency to adopt a measure designed to restore the free movement of the product in question.
Compensation
The applicants submit that, as far as concerns Denkavit Commerciale (the purchaser), the damage suffered lies in the fact that the feeding-stuffs which it imports, owing to the need to abide by the nitrate contents which have been imposed, cost more than they would if the prohibition complained of was not in being. As far as concerns Denkavit Nederland (the vendor) the damage flows from the cost of transporting the goods which were stopped at the Italian frontier. The two applicants reserve the right to prove this damage by documentary evidence during the proceedings. The Commission's answer to this is that in order for economic damage to give rise to compensation that damage must amount to a wrong, that is to say it must flow from unlawful conduct or at least from an infringement of a superior legal principle. This is not the case in these proceedings because the measures adopted by the Italian Government were valid, since the obligation on that Government to repeal them takes effect only ex nunc. Finally, there is no damage since the two Denkavit companies, being vendor and purchaser respectively, form a single economic entity.
The applicants, in their reply, point out that in this particular case the issue is not liability for legislative acts but for failure to take a decision. It is the Commission's inertia which is at issue and which resulted in Directive No 74/63/EEC being applied in a different way in Italy than in the other Member States.
Lastly, the applicants give their reply to the Commission's assertion that Denkavit Commerciale s.r.l. and Denkavit Nederland B.V. form a single economic unit. On the one hand, for the production of its feeding-stuffs Denkavit Nederland B.V. is forced to buy a type of powdered whey containing a limited quantity of nitrates at a higher price. As a result the increase in the cost of the raw material leads to a higher selling price. On the other hand, after Denkavit Commerciale s.r.l. has bought the finished goods at this increased price it must in turn dispose of them at a price determined by the competition on the open market. Consequently, even if the operations carried out by this economic unit are taken into consideration, a financial loss due to the fact that the increase in costs has not been matched by an increase in profits can be recorded. In concrete terms, the damage suffered amounts to Hfl 15000, that is six million lire, per month. Lastly, as far as concerns the damage suffered by Denkavit Nederland B.V. under the head of transport costs and analyses of feeding-stuffs, the applicants quantify it respectively at Hfl 50000 and one and a half million lire per month. Taking into account, however, the fact that owing to the Commission's failure to take a decision the loss continues to be suffered, the aggregate amount cannot be determined.
The Commission in its rejoinder emphasizes that none of the provisions mentioned by the applicants in their reply represents a superior legal principle, a breach of which might legally justify an action for damages. Furthermore, the applicants' assertion that the Commission, in this matter, has acted in an administrative capacity is wrong because the amendment of a directive is a legislative act, even if the extent of the legislator's margin of discretion may be greater or less.
Finally, as far as the quantum of the damage is concerned the Commission is of the opinion that the applicants have not produced sufficient evidence.
The parties submitted oral observations at the public hearing on 10 October 1978.
The Advocate General delivered his opinion at the hearing on 8 november 1978.
Decision
1. The purpose of the application, which was received at the Court Registry on 13 February 1978, according to its wording, and on the basis of Article 215 of the Treaty, is: (1) To obtain a declaration that the Commission has acted unlawfully in that it failed to adopt a measure in respect of the Italian State requiring it to revoke the urgent note (‘biglietto urgente’) of 7 September 1976 whereby the Italian authorities fixed a maximum permitted level for nitrates in certain feeding-stuffs and prohibited the marketing and importation of feeding-stuffs which did not fulfil that condition; (2) To obtain an order enjoining the Commission to adopt such a measure as a matter of urgency; and (3) To obtain an order that the Commission shall pay the applicants such sums as shall be determined subsequently by the Court for the damage which they claim to have suffered as a result of the Commission's failure to act or delay in acting in the manner indicated above; To obtain in each case an order that the Commission should pay the costs.
2. The first claim relates not to the subject-matter of the application but to the legal foundation which may justify the two other claims, so that the examination of that claim involves consideration of the other two.
3. As far as concerns the second claim in this application, the Commission by Decision No 78/523/EEC of 30 May 1978 (Official Journal L 159, p. 45) — adopted during these proceedings — decided on the basis of Council Directive No 74/63/EEC of 17 December 1973 on the fixing of maximum permitted levels for undesirable substances and products in feeding-stuffs that it was unnecessary to fix maximum permitted levels for nitrates in feeding-stuffs (Article 1) and that the Italian Republic should take the measure necessary to comply with that decision within one month of its notification (Article 2), which means that the Government of that Member State was required to repeal the urgent note (‘biglietto urgente’) at issue within the period specified.
4. Consequently this claim no longer has any purpose.
5. The third claim in the application is for compensation for the damage which the applicants claim to have suffered by reason of the fact that deliveries of feeding-stuffs by Denkavit Nederland — the second applicant — to its Italian subsidiary, Denkavit Commerciale — the first applicant — and in particular one delivery of 12 tonnes which arrived at the Italian frontier on 9 November 1977, were stopped at the said frontier because their potassium nitrate content was higher than that permitted by the ‘urgent note’ issued by the Italian Minister of Health on 7 September 1976.
6. It is the applicants' view that the Commission, by failing, as from 7 October 1976 — being one month after the adoption of the ‘urgent note’ — and in any event as from 5 November 1977 — being one month after the judgment of the Court of 5 October 1977 in Case 5/77, Carlo Tedeschi V Denkavit Commerciale s.r.l. [1977] ECR 1555 — to require the Italian Government to repeal the measure complained of, has acted in such a way as to incur liability within the meaning of the second paragraph of Article 215 of the Treaty.
7. A period of nearly 21 months elapsed between the date of the Italian measure — 7 September 1976 — and the date when the Commission adopted the decision requiring the Government concerned to withdraw it — 30 May 1978.
8. Consequently, taking into account the fact that the measure at issue was an obstacle to trade between Member States, it is necessary to consider whether the Commission, by conduct for which there was no justification, did not improperly contribute to the maintenance of that obstacle and thereby incur liability.
9. When the Italian Government adopted the measure complained of on 7 September 1976 it was a matter of uncertainty at law whether that measure's legal foundation was Council Directive No 70/524 of 23 November 1970 concerning additives in feeding-stuffs (Official Journal, English Special Edition 1970 (III), p. 840) — in which case it was definitive, subject to a review of its legality — or Council Directive No 74/63/EEC of 17 December 1973 on the fixing of maximum permitted levels for undesirable substances and products in feeding-stuffs — in which case it was merely a provisional measure adopted in exercice of the emergency powers conferred upon Member States by Article 5 of the directive, in anticipation of the Commission's decision, in accordance with the procedure laid down in Article 10 of the said directive, as to whether or not it was necessary to add nitrates to the list of ‘undesirable substances and products’.
10. This state of uncertainty was not brought to an end until, on 5 October 1977, in response to a request for a preliminary ruling, the Court of Justice delivered a judgment in which it held that the Italian measure came within the field of application of Directive No 74/63/EEC, so that it is only as from that date that it would be reasonable to require the Commission to have set in motion the procedure laid down in Article 10 of that directive.
11. Pursuant to Article 5 of Directive No 74/63/EEC, if a Member State adopts a provisional measure which restricts the free movement of goods, on the specific ground that the presence in certain feeding-stuffs of substances or products, which it considers are undesirable and of which the permissible level has not yet been determined by the directive, is detrimental to animal or human health, ‘an immediate decision shall be made’, in accordance with the procedure laid down in Article 10 of the directive, as to whether or not the annex to that directive should be supplemented or modified.
12. In the meantime the Member State may maintain, on a provisional basis, the measure which it has implemented.
13. Article 10 of Directive No 74/63/EEC provides that the decision as to whether or not to enter the substance in question on the list of undesirable products shall be adopted by the Commission provided that the latter complies in this connexion with the opinion previously delivered by a Standing Committee for Feeding-stuffs (hereinafter referred to as the Standing Committee).
14. If, on the other hand, the Commission wishes to depart from that opinion it must confine itself to submitting a proposal to the Council which must make the decision, the Commission regaining some of its freedom of action only if the Council has not reached a decision within 15 days.
15. On 7 September 1976 the matter was brought before the Standing Committee, which decided at its first meeting on that date that the question whether nitrates in feeding-stuffs may be harmful should be referred to a ‘Scientific Committee for Feeding-stuffs’ which it wished to have set up.
16. On 24 September 1976 the Commission set up that Scientific Committee which met nine times during the years 1976 to 1978 before, as is shown by the minutes of its meetings on 8 December 1977 and 19 April 1978, being in a position to prepare a definitive opinion to the effect that nitrates in feeding-stuffs are harmless.
17. The Standing Committee for its pan had recorded on 27 February 1978 in one of its minutes that ‘eight delegations are opposed to any modification of the annex to Directive No 74/63/EEC’ and went on to state that ‘consequently the Commission's departments shall endeavour to find a satisfactory solution’ and in this way refrained from adopting an unambiguous attitude.
18. A sufficiently explicit opinion against the addition of nitrates to the annex to Directive No 74/63/EEC only appears, in the combined minutes of the meetings of the Standing Committee on 3 and 11 May 1978.
19. Immediately afterwards, that is on 30 May 1978, the Commission adopted a decision in accordance with the assessment of the Standing Committee and the Scientific Committee.
20. In those circumstances the Commission cannot be blamed for having waited until it was fully informed before adopting a decision on a matter as complex as the presence in feeding-stuffs of substances which might prove to be undesirable from the point of view of human or animal health.
21. The applicants also submit that the lengthy procedure which was followed was of no avail because it was clear at the outset that the presence of potassium nitrate was harmless.
22. This assertion is refuted both by the refusal of the Scientific Committee to express an opinion before it had carried out experiments and also by the fact that the Commission had drawn up a proposal limiting the potassium nitrate content, at least in the case of feeding-stuffs for certain animals.
23. Furthermore, the applicants overlook the fact that the Commission's responsibilities in this field are of a different kind to those of a trader who, in the case culminating in the judgment of 5 October 1977 (Case 5/77, cited above), conceded that powdered whey with a high nitrate content, which had previously been regarded as industrial waste, was added to feeding-stuffs not in order to improve their quality but for reasons connected with the economies which that operation made possible.
24. The certain knowledge throughout the Community that the institutions of the Community are vigilant to ensure that the free movement of goods cannot have any harmful effects on human or animal health is a factor which encourages that freedom of movement.
25. It follows from the above considerations that the conduct of the Commission is not such that it has incurred liability, so that the application must be dismissed.
Costs
26. Under the terms of Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to pay the costs.
27. The applicants have failed in their submissions and must therefore be ordered to pay the costs.
On those grounds, THE COURT, hereby:
1 Dismisses the application;
2 Orders the applicants to pay the costs.