JUDGMENT OF 25. 11. 1980 — CASE 820/79 BELGIUM v COMMISSION

In Case 820/79

THE COURT, composed of: J. Menens de Wilmars, President, P. Pescatore and T. Koopmans (Presidents of Chambers), Lord Mackenzie Stuart, 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 of the case, the course of the procedure, the conclusions, submissions and arguments of the parties may be summarized as follows:

I — Facts and written procedure

A — Regulations applicable

1. In order to permit the export of products covered by Regulation No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (Official Journal, English Special Edition 1968 (I), p. 176) Article 17 (1) thereof makes provision for the introduction of export refunds. By paragraph (2) of the same article the refund “may be varied according to use or destination”. By Article 6 (2) of Regulation No 876/68 of the Council of 28 June 1968 laying down general rules for granting export refunds on milk and milk products and criteria for fixing the amount of such refunds (Official Journal, English Special Edition 1968 (I), p. 234) the varied refund shall be paid “... provided it is proved that the product has reached the destination for which the refund was fixed”. In regard to acceptable means of proof Article 8 (1) of Regulation No 1041/67 of the Commission of 21 December 1967 on detailed rules for the application of export refunds on products subject to a single price system (Official Journal, English Special Edition 1967, p. 323) as amended by Regulation No 1056/68 of the Commission of 23 July 1968 (Official Journal, English Special Edition 1968 (II), p. 343) and by Regulation No 499/69 of the Commission of 17 March 1969 (Official Journal, English Special Edition 1969 (I), p. 114) provides that for the application of Article 6 (2) of Regulation No 876/68 the party concerned must submit The power given to national authorities to recognize other documents as equivalent was removed by Regulation No 2110/74 of the Commission of 26 July 1974 (Official Journal 1974, L 220, p. 1). Evidence of importation and entry into circulation in the country of destination required by that regulation, and not of arrival at destination as before, simply consists of the production of the relevant customs document, or of a copy or photocopy of such document certified by the competent authorities.

“one copy of the transport document and, at the discretion of the competent national authorities, one or more of the following documents certifying arrival in the country of destination or for the use in question:

A copy of the customs or port document made out in the country of destination, a certificate issued by the official services of one of the Member States established in that country, a certificate by an international control and surveillance company. The competent national authorities may recognize other documents as equivalent and may require additional forms of proof. They shall forthwith so inform the Commission which shall without delay inform the other Member States thereof”.

2. Regulation No 729/70 of the Council of 21 April 1970 on the financing of the common agricultural policy (Official Journal, English Special Edition 1970 (I), p. 218) makes provision for a system of direct financing by the Community of refunds on exports to nonmember countries and of intervention intended to stabilize the agricultural markets by the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (hereinafter referred to as “the Fund”). Under Article 4 of that regulation the Commission is to make available the necessary resources to the competent national authorities and bodies. By Article 5 (2) (b) of that regulation the Commission, on the basis of the annual accounts submitted by the Member States, is to make up the accounts relating to the expenditure by the national authorities and bodies. By Article 8 of Regulation No 1723/72 of the Commission of 26 July 1972 on making up accounts for the European Agricultural Guidance and Guarantee Fund, Guarantee Section (Official Journal, English Special Edition, Second Series, III, p. 109) the decision to make up the accounts shall cover amongst other things, “the determination of the amount of expenditure incurred in each Member State during the year in question, recognized as chargeable to the EAGGF, Guarantee Section”.

B — The facts

1. By decision No 79/893 of 12 October 1979 (Official Journal, L 278, p. 9) the Commission determined in regard to the Kingdom of Belgium the amount of expenditure recognized as chargeable to the Guarantee Section of the Fund. As is apparent from the fourth recital to that decision the Commission considered that “under Articles 2 and 3 of Regulation (EEC) No 729/70, only refunds on exports to nonmember countries..., granted ... according to Community rules within the framework of the common organization of agricultural markets, may be financed; ... the inspections carried out show that a part of the expenditure declared amounting to BF 50439735 does not satisfy the requirements of these provisions and therefore cannot be financed”. The part of that sum in dispute, amounting to BF 29008562, concerns varied export refunds on milk and milk products paid on the basis of cif freight prepaid bills of lading. That sum represents the difference between the amount of the varied refund and the part of the refund calculated at the lowest rate applying on the day when the customs export formalities were completed.

2. The cause of the dispute is a difference of opinion about the evidential documents acceptable under Article 8(1) of Regulation No 1041/67 and in particular about the construction of the expression “other equivalent documents”. Pursuant to the last sentence of that paragraph the applicant communicated to the Commission by letter of 17 September 1968 confirmed by telex message of 26 November 1971 the arrangements made by the Belgian authorities with regard to evidential documents recognized for the payment of varied export refunds on milk products, beef and veal and fruit and vegetables. It is apparent from those communications that the Belgian authorities recognized as an “equivalent” evidential document a copy certified to be a true copy of the original of a cif freight prepaid bill of lading which was: Issued by a shipping agent who was on the list of shipping agents recognized by the Federation Maritime of Antwerp; Issued by a shipping agent who was a member of a sea transport association recognized by that Member State warranting that the goods would not change destination en route (in the case of exportation via another Member State). That arrangement also applied in the case of sea/land bills of lading showing the final destination of the goods. In accordance with Article 8 (1) of Regulation No 1041/67 the Commission informed the other Member States of that arrangement by communication of 10 January 1969. As is apparent from the transcript of the recording sent to the Court by the defendant the Belgian arrangement figured in a discussion at a joint meeting of experts under the aegis of the Expert Group on Trade Mechanisms about the application and amendment of Regulation No 1041/67. During the course of the preparations to clear the accounts of the Guarantee Section of the Fund for the 1973 financial year the Director-General for Agriculture at the Commission notified the Belgian Government by letter of 23 December 1976 that the part of the refund varied according to destination paid on the basis of copies of freight prepaid bills of lading must be treated as having been paid in the absence of proof as to arrival required by Article 8 (1) of Regulation No 1041/67 and by Article 6 (2) of Regulation No 876/68. In that connexion the Director-General referred to the view maintained by the officers of the Commission at the meeting of experts of the Trade Mechanisms Group that a bill of lading constitutes a transport document only. Consequently, the Director-General invited Belgium to send him a corrective statement of its application for the clearance of accounts for the 1973 financial year. By letter of 26 April 1977 the applicant confirmed that it recognized a cif freight prepaid bill of lading as an equivalent evidential document and refused to accept the Commission's viewpoint. On 19 June 1978, after the exchange of several letters, the applicant, at the Commission's request, sent it a new statement of expenditure for the varied refunds for the 1973 financial year leaving out those paid on the basis of cif freight prepaid bills of lading. In so doing it made it clear that the submission of a new statement did not mean that it had changed its mind about the validity of a cif freight prepaid bill of lading as an equivalent document within the meaning of Article 8 (1) of Regulation No 1041/67. Subsequently the Commission adopted the Decision of 12 October 1979 which the applicant is now challenging by this application.

3. The application was lodged at the Court Registry on 19 December 1979. On hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open oral procedure without any preparatory inquiry. However, it invited the Belgian Government to describe the precise scope of the warranty obligations, as to arrival in the country of destination of goods transported under cover of a freight prepaid bill of lading, resting on a shipping agent who is on the list of shipping agents recognized by the Federation Maritime of Antwerp and on that association itself.

II — Conclusions of the parties

The applicant claims that the Court should:

Declare the application admissible and well-founded in so far as the contested decision refuses to charge to the Fund, Guarantee Section, for the 1973 financial year, the sum of BF 29008562 relating to varied refunds paid by the applicant upon submission of the equivalent documents within the meaning of Article 8 (1) of Regulation No 1041/67;

Order the defendant to pay the costs.

The defendant contends that the Court should:

Dismiss the application;

Order the applicant to pay the costs.

III — Submissions and arguments of the parties

In regard to the admissibility of the application the applicant first of all points out that it received notification of the decision at issue on 18 October 1979.

In regard to the substance of the application it makes two submissions.

First submission

By its first submission the applicant contends that the Commission acted contrary to Article 8 (1) of Regulation No 1041/67 by refusing to charge to the Guarantee Section of the Fund expenditure on varied refunds incurred on the basis of documents recognized by the Belgian authorities as proof of the arrival of the goods at their destination.

It states that the arrangements as to proof which it introduced offered every guarantee as to arrival at destination.

A bill of lading is not in fact only a transport document; there are a number of aspects by which it affords a guarantee of loading for the destination in question. Thus it constitutes not only proof of loading and, in most cases, of the contract of affreightment too; it is also the delivery document for the goods. The applicant refers here to Article 89 of Book II (Transport by Sea and on Land) of the Belgian Commercial Code pursuant to which only the holder of the bill of lading is entitled to have the consignment delivered to him.

The applicant further argues that a cif freight prepaid bill of lading affords every guarantee that the export transaction will actually be effected to the agreed destination, the transport costs having been paid in advance. Indeed, the very object of the Community system of varied refunds is to cover the costs linked to distance.

What is more the requirement that the shipping agent must be recognized by the Fédération Maritime of Antwerp constitutes a guarantee that the goods will actually arrive at their destination.

By way of reply the applicant again points out that Article 8 (1) of Regulation No 1041/67 allows proof of arrival “for the use in question” in a country other than that of final destination to suffice. To that extent at any rate the Belgian arrangements are the equivalent of the documents specifically listed in Article 8.

The defendant observes first of all that rules such as those concerning varied refunds, whose object is to accord financial benefits to traders, require a strict system of proof (see judgments of 22 October 1970, Case 12/70 Craeynest v Belgium [1970] ECR 905 and of 7 February 1979, Case 18/76 Germany v Commission [1979] ECR 343). The power to recognize documents as being equivalent to those referred to in Article 8 (1) of Regulation No 1041/67 cannot absolve Member States from the obligation to require strict proof as to arrival at destination.

In regard to the arrangements as to proof applied by the Belgian authorities the defendant contends that a freight prepaid bill of lading issued and signed at the time when the goods leave the geographical territory of the Community constitutes at most the transport document first required by Article 8 cited above.

In the defendant's view the words “freight prepaid” cannot be a ground for recognizing a bill of lading as an equivalent document constituting proof of the arrival of goods at their destination. There are in fact factors other than the cost of transport, in particular the specific characteristics of each import transaction, which determine how the refund is fixed. Furthermore the guarantee allegedly provided by associating the Fédération Maritime of Antwerp with the matter does not change the nature of a bill of lading.

In its rejoinder the defendant contests the interpretation suggested by the applicant that for the purpose of applying Article 8 it is sufficient to guarantee that the goods in question have been loaded on board. It was precisely the fact that the original function of a bill of lading was to act as proof of loading which led the Commission to refuse to recognize it as constituting proof of arrival at destination. The words “certifying arrival in the country of destination or for the use in question” contained in Article 8 (1) are rather intended to refer to the fact that varied refunds are fixed either for a given country, or for an area covering several countries, or for a specific use.

In this connexion the defendant further refers to the ninth recital in the preamble to Regulation No 1041/67 which speaks of proof that the product has “reached the destination” and also of “documents ... which establish beyond doubt... that the ... goods have reached their destination”.

As the Belgian delegation admitted at the meeting of experts of the Trade Mechanisms Group held on 25 and 26 January 1972 a freight prepaid bill of lading is not evidence that the goods have arrived at their destination. Such a document does not a fortiori constitute proof that they have “been cleared through customs and put into free circulation at the destination” (judgment of 2 June 1976, Case 125/75 Milch-, Fett- und Eier-Kontor GmbH v Hauptzollamt Hamburg-Jonas [1976] ECR 771, paragraph 6 at p. 783). Such a document cannot therefore protect the Community from the risk of goods' being diverted or from fraudulent practices which the Community rules are designed to eliminate.

Finally, the Commission could not accept the validity of a freight prepaid bill of lading as proof of arrival at destination without ignoring the obligation imposed on it by Articles 2 and 3 of Regulation No 729/70 to charge to the Fund only expenditure incurred in accordance with the Community rules and also without comprising the equal treatment of traders of the Member States (see judgment of 7 February 1979, Case 18/76 Germany v Commission [1979] ECR 343, paragraph 8 at p. 384).

Second submission

In the second place the applicant accuses the Commission of having shown a lack of care by its delay in refusing to take into consideration the evidential documents recognized by Belgium.

In this connexion it contends that, after the Commission was notified in 1968 and 1971 about the Belgian arrangements, instead of positively showing its disapproval, it merely relayed that information to the other Member States. What is more on 2 December 1975 the Commission accepted the Belgian arrangement when accounts were cleared for the financial years 1971 and 1972 and it also accepted it on 20 December 1977 for the financial years 1967 to 1970.

That attitude on the part of the Commission aroused a legitimate expectation in the applicant as to the validity of its arrangements for proving delivery. In those circumstances the defendant cannot contest, several years later on the clearing of the accounts for the financial year 1973, the value of the evidential documents recognized in Belgium.

The defendant observes that the last sentence of Article 8 (1) of Regulation No 1041/67 simply makes provision for a procedure for the supply of information. The Commission is not under a duty to decide as to the validity of equivalent documents notified to it under Regulation No 1041/67.

Furthermore it refers to the transcript of the recording of the meeting of experts of the Trade Mechanisms Group held on 25 and 26 January 1972 in order to emphasize the very clear position which it adopted from 1972 onwards on the recognition of bills of lading as equivalent documents.

The applicant states that there is no reference to be found in the minutes of that meeting to such a clear position on the part of the Commission. Moreover, it was only a meeting of experts whose deliberations have no legal effect. Consequently the statement made at that meeting cannot be regarded as representing the adoption of an official view by the Commission.

Finally, in the applicant's opinion, the last part of Article 8 (1) of Regulation No 1041/67 imposes on the Commission the obligation both to inform the other Member States and to make sure that the provision in question is properly applied, in keeping with its general supervisory task.

IV — Oral procedure

At the sitting on 2 July 1980 oral argument was presented on behalf of the parties.

The Advocate General delivered his opinion at the sitting on 7 October 1980.

Decision

1. By application lodged at the Court Registry on 19 December 1979 the Kingdom of Belgium brought an action under Article 173 of the EEC Treaty for a declaration that Commission Decision No 79/893/EEC of 12 October 1979 concerning the clearance of the accounts presented by the Kingdom of Belgium in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, Expenditure for 1973 (Official Journal, L 278, p. 9) is void in so far as the Commission did not recognize as chargeable to the Fund the sum of BF 29008562 concerning varied export refunds on milk and milk products paid by the applicant.

2. By Article 6 (2) of Regulation No 876/68 of the Council of 28 June 1968 laying down general rules for granting export refunds on milk and milk products and criteria for fixing the amount of such refunds (Official Journal, English Special Edition 1968 (I), p. 234) a varied export refund is payable provided it is proved that the product has reached the destination for which the refund was fixed. For the application of that provision Article 8 (1) of Regulation No 1041/67 of the Commission of 21 December 1967 on detailed rules for the application of export refunds on products subject to a single price system (Official Journal, English Special Edition 1967, p. 323), as amended by Regulation No 1056/68 of the Commission of 23 July 1968 (Official Journal, English Special Edition 1968 (II), p. 343) and by Regulation No 499/69 of the Commission of 17 March 1969 (Official Journal, English Special Edition 1969 (I), p. 114) provides that the party concerned must submit one copy of the transport document and, at the discretion of the competent national authorities, one or more of the following documents certifying arrival in the country of destination or for the use in question :

“A copy of the customs or port document made out in the country of destination, a certificate issued by the official services of one of the Member States established in that country, a certificate by an international control and surveillance company. The competent national authorities may recognize other documents as equivalent and may require additional forms of proof. They shall forthwith so inform the Commission which shall without delay inform the other Member States thereof”.

3. The first submission accuses the Commission of having infringed Article 8 (1) of the said Regulation No 1041/67 by refusing in the contested decision to recognize the validity of documents submitted by the applicant as proof as to arrival at their destination of the goods in question.

4. It is apparent from the papers placed before the Court that the Belgian authorities agreed to pay varied refunds on the production of a bill of lading the declarations in which are identical to those of the export licence subject to the dual requirement that the bill of lading is a cif bill of lading bearing the words “freight prepaid” and that it is issued by a shipping agent recognized by the Compagnie Maritime Anversoise.

5. The applicant maintains that such a bill of lading is not only a transport document but that by showing that the costs of transport have been paid before the goods are exported it guarantees that they will be exported to the agreed destination. The additional requirement concerning the involvement of a shipping agent recognized by the Compagnie Maritime Anversoise is bound up with the fact that that body warrants to the exporter that the goods will arrive at the destination.

6. It should be recalled that the Court has already held in its judgment of 2 June 1976 (Case 125/75 Milch-, Fett- und Eier-Kontor GmbH w Hauptzollamt Hamburg-Jonas [1976] ECR 771) that in order that the varied refund may be paid it is necessary for the goods to have been cleared through customs and put into free circulation at the destination. It went on to add that only objective criteria may be taken into account in answering the question whether goods have reached that destination.

7. In those circumstances the Commission was right in taking the view that a bill of lading even bearing the words “freight prepaid” cannot constitute proof of the arrival of goods at their destination within the meaning of the Community rules.

8. The situation is not changed by the fact that such a bill of lading is issued by a shipping agent recognized by the Compagnie Maritime Anversoise as the applicant has not been able to define the scope of the obligation which it says is incumbent on that association or on a shipping agent recognized by it to warrant that the goods will arrive at their destination.

9. The first submission must accordingly be rejected.

10. The second submission accuses the Commission of delay in reacting and of showing a lack of care. The applicant says that in accordance with Article 8 (1) of Regulation No 1041/67 it notified the Commission in 1968 and in 1971 of the documents considered to be “equivalent” within the meaning of that provision; the Commission simply relayed that information to the other Member States without evincing its intention to refuse to accept the documents recognized by the Belgian authorities. It was not until 1976 that the Commission made its attitude clear.

11. It follows from the consideration relating to the first submission that the practice followed by the Belgian authorities of accepting under certain conditions bills of lading as proof of the arrival of goods at their destination arises from an incorrect interpretation of Community law. In such a case the Commission is not obliged to charge expenditure incurred on that basis to the Fund unless the incorrect application of Community law may be attributed to a Community institution. The Court takes the applicant's second submission as contending that the incorrect interpretation of the provisions in question may be attributed to the Commission's conduct.

12. The applicant has admitted that at a meeting of the Expert Group on Trade Mechanisms in January 1972 the officers of the Commission formally contested the validity of a freight prepaid bill of lading under the Community rules and that at its 300th meeting on 23 August 1973 the Management Committee for Milk and Milk Products unanimously upheld the argument of the Commission's representative to the effect that as regards the measures of control provided for by Regulation No 1041/67 in the case of the grant of varied refunds Member States should require proof establishing that the goods have been put into free circulation in the country of destination.

13. It is true, as the applicant submits, that the adoption of those views by the Commission's officers may not be regarded as the official views of the Commission as an institution of the Community. Nevertheless, particularly in view of the unequivocal terms in which the competent officers of the Commission gave their opinion on the practice of the Belgian authorities, only a clear indication of a contrary opinion on the part of the Commission as an institution could have allowed the Belgian Government to believe that that institution had approved the practice at issue.

14. No evidence of any indication of a contrary opinion has been adduced by the applicant; in particular mere relaying to other Member States, under Article 8 (1) of Regulation No 1041/67, of information given by the Belgian Government about the documents which it regarded as equivalent to those referred to in that provision does not amount to such an indication.

15. Consequently the applicant has not established that the incorrect application of the provisions of Article 8 of Regulation No 1041/67 by the Belgian authorities should be attributed to the Commission.

16. It follows that the application must be rejected.

Costs

17. Under Article 69 (2) of the Rules of Procedure the unsuccessful party shall be ordered to bear the costs; as the applicant has failed in its submissions it must be ordered to pay the costs.

On those grounds, THE COURT hereby:

1 Rejects the application;

2 Orders the applicant to pay the costs.