JUDGMENT OF 14. 7. 1983 — CASE 224/82 MEIKOKONSERVENFABRIK v GERMANY

In Case 224/82 REFERENCE to the Court under Article 177 of the EEC Treaty by the Verwaltungsgericht [Administrative Court] Frankfurt am Main for a preliminary ruling in the action before that court between

THE COURT (Third Chamber) composed of: U. Everling, President of Chamber, Y. Galmot and C. Kakouris, Judges, Advocate General: S. Rozès Registrar: J. A. Pompe, Deputy Registrar

gives the following

JUDGMENT

Facts and Issues

The facts of the case, the course of the procedure and the written observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the European Economic Community may be summarized as follows:

I — Facts and written procedure

The Community regulations applicable

Council Regulation (EEC) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (Official Journal 1977, L 73, p. 1) introduced a system of production aid for the products set out in Annex la, which was inserted in that regulation by Council Regulation (EEC) No 1152/78 of 30 May 1978 (Official Journal 1978, L 144, p. 1). Council Regulation (EEC) No 1639/79 of 24 July 1979 extended the system of production aid to cherries preserved in syrup with effect from the beginning of the 1980/81 marketing year (Official Journal 1979, L 192, p. 3).

According to Article 3b (4) of Council Regulation No 516/77, as amended by Regulation No 1152/78, “production aid shall be granted to processors who have concluded contracts in accordance with Article 3a”. According to Article 3a (2), “these contracts, concluded for a minimum period to be determined, must specify the quantities of raw material to which they relate, the schedule for deliveries to processors and the price to be paid to producers”.

The effect of the last sentence of Article 3a (2) read together with Article 3b (5) and (6) is that the aid, fixed before the beginning of each marketing year, is paid on application to processors as soon as the competent agencies of the Member States concerned, to which the contract has been forwarded, have carried out the checks relating to their performance.

The rules for the application of the system of aid were laid down by the Commission in Regulation (EEC) No 1530/78 of 30 June 1978 (Official Journal 1978, L 179, p. 21). That regulation was amended by Commission Regulations (EEC) No 1348/80 of 30 May 1980 (Official Journal 1980, L 135, p. 66), No 1964/80 of 24 July 1980 (Official Journal 1980, L 191, p. 17) and No 2546/80 of 2 October 1980 (Official Journal 1980, L 260, p. 14).

The effect of those regulations is that the processor cannot claim payment of the aid unless the contracts and supplementary agreements have been signed and forwarded to the competent national agencies within the periods laid down by the Commission.

According to Article 1 of Regulation No 1530/78, as amended by Regulation No 1348/80, contracts relating to the processing of hard-fleshed heart cherries and sweet cherries and any supplementary agreements had to be concluded by 10 and 30 July 1980 respectively. Owing to the delay in harvesting the cherry crop in 1980 due to difficult weather conditions the contracts and supplementary agreements could not be signed in time. By Regulation No 1964/80 of 24 July the Commission therefore extended the periods for the signing of contracts and amendments thereto until 31 July and 15 August 1980 respectively.

According to Article 2 of Regulation No 1530/78, a copy of the contract and of any endorsement thereof had to be forwarded before the date “on which they [were] to take effect”, that is to say before the first delivery of raw materials, to the national agency responsible for administering the system of aid and inspecting the raw materials before performance of the contract.

On account of the difficulties mentioned above contracts concluded late had to be performed immediately, as the quality of the fruit was likely to deteriorate. Because of these special circumstances Article 2 of Regulation Nó 1530/78 was supplemented on 2 October 1980 by Regulation No 2546/80, which provides that:

“However, for the.1980/81 marketing year, contracts concluded for cherries may be forwarded, even after the date on which they take effect, to the said agency not later than 31 July 1980.”

Facts and procedure

Meiko-Konservenfabrik, whose main business is the processing of fruit into preserves, entered into supply contracts with cherry growers on 21 July 1980. An addendum to those contracts was signed on 31 July 1980.

The fruit was delivered during the period 23 July to 31 July 1980. Fearing deterioration due to the conditions in which it was harvested, Meiko immediately processed it.

Relying on Articles 3a and 3b of Council Regulation No 516/77 of 14 March 1977, as amended by Regulation No 1152/78 of 30 May 1978, Meiko applied to the Bundesamt für Ernährung und Forstwirtschaft for payment of a production aid for 1980 in respect of 17785 kg of sweet cherries to be preserved in syrup.

Owing to the delay in the forwarding of the contracts and supplementary agreements, which were notified to the Bundesamt on 7 and 19 August 1980 respectively, the Bundesamt, acting pursuant to Article 1 of Regulation No 2546/80, refused the application for production aid by a decision of 6 November 1980, which it confirmed in its reply to an objection lodged by Meiko.

In view óf that refusal Meiko brought an action against the Federal Republic of Germany, represented by the Bundesamt für Ernährung und Forstwirtschaft before the Verwaltungsgericht Frankfurt am Main, which, by order of 3 August 1980, decided to stay the proceedings in order to ask the Court of Justice for a preliminary ruling on the following question:

“Does Article 1 of Commission Regulation (EEC) No 2546/80 of 2 October 1980 (Official Journal 1980, L 260, 3. 10. 1980, p. 14) offend against the principles of proportionality and equal treatment in retroactively fixing a time-limit, namely 31 July 1980, by which the concluded contracts had to be forwarded to the appropriate agency?”

According to the reasons set out in the order for reference, the German court, which refers to certain judgments of the Court of Justice concerning the principles of porportionality and equal treatment, considers that in retroactively fixing 31 July as the time-limit for the forwarding of contracis Regulation No 2546/80 of 2 October 1980 is an arbitrary measure which for no objective reason puts a specific group of undertakings, including Meiko, at a disadvantage compared with competitors who, having processed the goods immediately after their delivery, forwarded their contracts, quite by chance, before 31 July 1980.

The German court also considers that in operating automatically the provision is contrary to the principle of proportionality inasmuch as it does not allow the penalty of being refused aid to be related to action attributable to Meiko.

The order for reference was registered at the Court on 23 August 1982;

In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the European Communities, written observations were lodged by the Commission of the European Communities, represented by Jörn Sack and Christine Berardis-Kayser, both members of its Legal Department, acting as Agents. By letters dated 29 September 1982 and 5 October 1982 the Bundesamt für Ernährung und Forstwirtschaft and the German Government informed the Court that they would not be lodging written observations.

Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided, in accordance with Article 21 of the Statute and Article 45 of the Rules of Procedure, to undertake measures of inquiry.

By a letter dated 10 February 1983 the Registrar of the Court wrote to the Government of the Federal Republic of Germany as follows :

“By Regulation No 2546/80 of 2 October 1980 (Official Journal 1980, L 260, p. 14) the Commission fixed 31 July 1980 as the time-limit for forwarding contracts for the processing of cherries to the competent national agencies. In its written observations submitted to the Court the Commission stated that, since the provision was an exceptional one requested by the Member States, it had to rely primarily on the information provided by them on the actual situation in their countries in order to fix an objectively reasonable date. 31 July was the date proposed by the Federal Republic of Germany to resolve the problem (written observations, p. 5). The Government of the Federal Republic of Germany is requested to give a written reply to the follwing questions by 4 March 1983: 1. Why did the Federal Republic of Germany propose that 31 July 1980 should be fixed as the time-limit for forwarding contracts for the processing of cherries to the Bundesamt für Ernährung und Forstwirtschaft? 2. Are there other German undertakings which, like Meiko-Konservenfabrik, did not forward processing contracts in time and are therefore in the same position as that undertaking?”

In the same letter the Registrar requested the German Government, in accordance with the wishes of the Court, to be represented by an agent or to send an expert to the hearing fixed for 21 April 1983.

The German Government lodged its observations on 3 March 1983. By a letter dated 4 March 1983 it informed the Court that Ulrich Maass, Oberregierungsrat at the German Ministry of Food, Agriculture and Forestry would be present at the hearing on 21 April 1983. Mr Maass would if necessary be assisted by a representative of the Bundesamt für Ernährung und Forstwirtschaft.

By order of 2 February 1983 the Court decided to assign the case to the Third Chamber in accordance with Article 95 (1) and (2) of the Rules of Procedure.

II — Summary of the written observations submitted to the Court by the Commission of the European Communities

The Commission believes that the validity of Regulation No 2546/80 cannot be called in question on the basis of the principles of proportionality and equal treatment.

As regards the alleged infringement of the principle of proportionality, the Commission observes that, in retroactively fixing 31 July as the time-limit by which processing contracts which had already taken effect had to be forwarded to the competent national agency, Regulation No 2546/80 of 2 October 1980 enabled a large number of undertakings to receive aid which they would not have obtained under the rule in Article 2 of Regulation No 1530/78 in force at the time of the conclusion of those contracts.

The Commission considers that the concession thus granted does not involve any error of judgment on its part because, since it was an exceptional rule requested by the Member States concerned, including the Federal Republic of Germany, which was particularly affected by the difficulties encountered in 1980, it could not fix an objectively reasonable date except in the light of information provided by the Member States on the actual situation in their own contries. As Germany had itself asked that processing contracts and supplementary agreements should be allowed, after taking effect, to be forwarded to the national agencies until 31 July 1980, the Commission considers that there was no reason, at least in this case, to extend the time-limit proposed.

The Commission further considers that an incomplete description of the facts by the Member States concerned should not necessarily render a Community regulation invalid. The Commission here emphasizes that, according to a telex message (attached to the written observations) which the German Ministry of Food sent to it as one of the proposals to amend Regulation No 1530/78, the Bundesamt “had in any case been acquainted with the undertakings in question for a long time”. Also the fact that a few applicants were not taken into consideration by the national authorities and their cases were not notified to the Commission cannot, in the Commission's opinion, be considered to be a breach by the contested regulation of the principle of proportionality.

As to the principle of equal treatment, the Commission maintains that, in so far as at the time when the processing contracts were signed Regulation No 1530/78, supplemented by Regulation No 1964/80, was in force, it was entitled to assume that, even if processing undertakings were unable to comply with the provisions requiring contracts to be forwarded before they took effect, they would forward them by 31 July 1980 in order to comply as far as possible with the provisions in force.

The fact that applicants who sent in their contracts before the final date are in a better position than those whose contracts were received after that date is an inevitable consequence of any legislation laying down general criteria.

The Commission suggests that the Court should give the following answer to the question asked by the Verwaltungsgericht Frankfurt am Main :

“Consideration of the question raised has disclosed no factor of such a kind as to affect the validity of Commission Regulation (EEC) No 2546/80 of 2 October 1980.”

III — Observations of the German Government submitted in reply to the questions asked by the Court

In reply to the question why the Federal Republic of Germany proposed that 31 July 1980 be fixed as the time-limit for forwarding contracts for the processing of cherries to the Bundesamt für Ernährung und Forstwirtschaft, the German Government first of all points out that the delay in 1980 in the forwarding of contracts was mainly due to the fact that the Community regulations on production aids for cherries were applied in Germany for the first time in the 1980/81 marketing year and therefore there were no precedents for the drafting of contracts. In proposing the date of 31 July 1980 the German Government considered it appropriate for two reasons :

First, that date coincided with the time-limit for the signing of processing contracts laid down by Commission Regulation No 1964/80 of 24 July 1980.

Secondly, the German Government thought that the undertakings concerned would thus have sufficient time to become familiar with the new rules and to make all necessary arrangements.

The German Government adds that, as it only wanted a concession which was in keeping with the principle that contracts must be forwarded to the competent agency before they take effect, it thought it necessary to choose an appropriate date without offending against the principle laid down by Article 2 of Commission Regulation No 1530/78.

The German Government replies in the affirmative to the question whether other German undertakings are in the same situation as Meiko.

The German Government states that of the 207 contracts forwarded to the Bundesamt für Ernährung und Forstwirtschaft after they had begun to be performed only 169 benefited from the concession granted by the Commission in Regulation No 2546/80 of 2 October 1980. Production aid was therefore refused in respect of the 38 processing contracts forwarded after 31 July 1980.

IV — Oral procedure

The German Government, represented by Ulrich Maass, Oberregierungsrat at the Federal Ministry of Food, Agriculture and Forestry, appearing as an expert, and the Commission of the European Communities, represented by Christine Berardis-Kayser, acting as Agent, presented oral argument at the sitting on 21 April 1983.

The Advocate General delivered her opinion at the sitting on 9 June 1983.

Decision

1. By an order dated 3 August 1982, which was received at the Court on 23 August 1982, the Verwaltungsgericht [Administrative Court] Frankfurt am Main referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty a question on the validity of Commission Regulation (EEC) No 2546/80 of 2 October 1980 (Official Journal 1980, L 260, p. 14) amending for the eleventh time Commission Regulation (EEC) No 1530/78 of 30 June 1978 laying down rules for the application of the system of aid in respect of certain products processed from fruit and vegetables (Official Journal 1978, L 179, p. 21).

2. That question was raised in the course of litigation in which Meiko-Konservenfabrik challenged the decision whereby the Bundesamt für Ernährung und Forstwirtschaft [Federal Office for Food and Forestry], Frankfurt am Main, had refused, on the basis of the aforementioned Regulation No 2546/80, to pay it the aid for which it applied in respect of the processing of sweet cherries intended for preservation in syrup.

3. The system of aid in question was introduced by Council Regulation (EEC) No 516/77 of 14 March 1977 on the common organization of the market in products processed from fruit and vegetables (Official Journal 1977, L 73, p 1) in respect of the products set out in Annex la thereof, as amended and extended by Council Regulations Nos 1152/78 of 30 May 1978 (Official Journal 1978, L 144, p. 1) and 1639/79 of 24 July 1979 (Official Journal 1979, L 192, p. 3).

4. It follows from Article 3a of Council Regulation No 516/77 and from the first and second recitals in the preamble to Council Regulation No 1152/78 that the system of aid for the production of processed fruit and vegetables was introduced in order to make such Community products more competitive with those of nonmember countries where the producer price was considerably lower. That system of aid was based on a system of contracts which, on the one hand, were binding on the Community producers and processors of fruit and vegetables and, on the other hand, ensured both the regular supply of the processing industries and a minimum price to be paid by the processors to the producers. Council Regulation No 1639/79 extended the system of aid to hard-fleshed heart cherries and other sweet cherries with effect from the 1980/81 marketing year.

8. In accordance with Articles 3c and 20 of Council Regulation No 516/77, detailed rules for the application of that system were laid down by Commission Regulation (EEC) No 1530/78 of 30 June 1978, which was later amended by Commission Regulations (EEC) Nos 1348/80 of 30 May 1980 (Official Journal 1980, L 135, p. 66), 1964/80 of 24 July 1980 (Official Journal 1980, L 197, p. 17) and 2546/80 of 2 October 1980 (cited above).

6. As a result of those rules, a processor may not claim payment of the aid unless the contracts and any supplementary agreements thereto were concluded within the time-limits laid down by the Commission. By virtue of Regulation No 1348/80 of 30 May 1980 the time-limit for the conclusion of contracts for the 1980/81 marketing year was 10 July 1980. However, as the harvest of hard-fleshed heart cherries and other sweet cherries was delayed in 1980, Regulation No 1964/80 of 24 July 1980 extended the time-limit to 31 July 1980.

7. Article 2 of Commission- Regulation No 1530/78 lays down a second requirement for the granting of aid by stating that a copy of the contracts must be forwarded “before the date on which they are to take effect”, that is to say before the commencement of the first delivery of fruit, to the agency designated by the Member State in which processing is to take place to administer the system of aid and to inspect the fruit before performance of the contract.

8. The weather conditions for the harvest in 1980 apparently made it very difficult for processors to comply with the time-limit set by Article 2 of Regulation No 1530/78 for the forwarding of a copy of the contract. Recognizing those exceptional difficulties, the Commission, by Article 1 of Regulation No 2546/80 of 2 October 1980, added the following words to Article 2 of Regulation No 1530/78:

“However, for the 1980/81 marketing year, contracts concluded for cherries may be forwarded, even after the date on which they take effect, to the said agency not later than 31 July 1980.”

9. On the basis of the latter provision and taking into account the fact that the contracts and supplementary agreements concluded by Meiko on 21 and 31 July 1980 were forwarded on 7 and 19 August 1980 respectively, the Bundesamt für Ernährung and Forstwirtschaft rejected that company's application for aid.

10. Meiko challenged that decision before the Verwaltungsgericht Frankfurt am Main, which referred the following question to the Court of Justice for a preliminary ruling under Article 177 of the EEC Treaty:

“Does Article 1 of Commission Regulation (EEC) No 2546/80 of 2 October 1980 (Official Journal 1980, L 260, 3. 10. 1980, p. 14) offend against the principles of proportionality and equal treatment in retroactively fixing a time-limit, namely 31 July 1980, by which the concluded contracts had to be forwarded to the appropriate agency?”

11. It follows from the wording used by the national court that the question on which a preliminary ruling is sought relates in essence to the validity of Article 1 of Regulation No 2546/80 of 2 October 1980 in the light of the general principles of law the observance of which is ensured by the Court of Justice.

12. As the Court stated in its judgments of 25 January 1979 in Case 98/78 (Racke v Hauptzollamt Mainz [1979] ECR 69) and Case 99/78 (Decker v Hauptzollamt Landau [1979] ECR 101), as a general rule it is contrary to the principle of legal certainty for a Community measure to specify a date prior to its publication as the date on which it is to take effect. It may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected.

13. In order to determine whether the principle of the protection of legitimate expectation has been complied with it is necessary to examine the situation which Regulation No 2546/80 was intended to correct in the light of the rules which were in force at the time. It must be recalled in that respect that at the time the persons concerned concluded the contracts the receipt of aid was subject to the two requirements laid down by Regulation No 1530/78 of 30 June 1978 and Regulation No 1964/80 of 24 July 1980, that is to say the conclusion of the contract by 31 July 1980 and the forwarding of a copy of it to the responsible national agency before the contract took effect. It must be recognized that processors who waited, as they were legally entitled to do, until the time-limit of 31 July 1980 to conclude their contracts could not have forwarded the documents on the same day in accordance with the new requirement laid down by Regulation No 2546/80 of 2 October 1980.

14. It must also be recognized that by retroactively subjecting the payment of aid to the forwarding of the contracts by 31 July 1980 the Commission acted in breach of the legitimate expectations of the persons concerned, who, having regard to the provisions in force at the time the contracts were concluded, could not reasonably have anticipated the retroactive imposition of a time-limit for forwarding the contracts which coincided with the time-limit for their conclusion.

15. It must be stated, furthermore, that the Commission was also in breach of the principle of equal treatment as regards processors of hard-fleshed heart cherries and other sweet cherries, who, as a result of Regulation No 2546/80, only received aid by the accident of having concluded their contracts at a relatively early date and having forwarded them relatively swiftly. In fact, it is clear from the documents submitted to the Court that 207 contracts were forwarded to the Bundesamt für Ernährung und Forstwirtschaft and that aid could not be granted in respect of 38 because they had not been forwarded by 31 July 1980.

16. It is true, as the Commission contended before the Court, that the contested regulation enabled a large number of undertakings to receive aid which they could not have obtained under the system which was established by Article 2 of Regulation No 1530/78 and which was in force at the time the contracts were concluded. It is also true that the Commission was under no obligation to alter the provisions of Regulation No 1530/78 retroactively.

17. Nevertheless, once the Commission had agreed to take into account the processors' difficulties and to correct the effects thereof, it was under a duty, in adopting the appropriate measures, to have regard to the legitimate expectations of the persons concerned and to ensure that they were accorded equal treatment.

18. In that respect the Commission contends that in adopting the contested regulation it took into account the views expressed in that connection by the Member States and that inasmuch as it was a question of adopting an exceptional provision, sought in particular by the Federal Republic of Germany, there was no objective reason to provide longer time-limits than those proposed by the German authorities themselves.

19. Whilst it is true that the attitude adopted by the German authorities contributed to the situation from which the dispute arose, inasmuch as it would appear that they proposed the time-limit of 31 July 1980 without having made a thorough study of the applications pending, that circumstance cannot, by itself, prove the validity of Regulation No 2546/80. In fact, the Commission was under a duty to check that the date suggested by the German authorities was compatible with the regulation which it had, itself, previously adopted.

20. In view of the foregoing, the reply to the question raised by the Verwaltungsgericht Frankfurt am Main must be that Article 1 of Commission Regulation No 3546/80 of 2 October 1980 as invalid inasmuch as it fixed 31 July 1980 as the final date for forwarding concluded contracts to the competent national agency.

Costs

21. The costs incurred by the Commission, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties tö the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds, THE COURT (Third Chamber), in answer to the question submitted to it by the Verwaltungsgericht Frankfurt am Main, by order of 3 August 1982, hereby rules: