Report for the Hearing delivered in Case 336/85

I — Facts

1. Article 1 (2) (b) of 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) provides that the Guarantee Section of the European Agricultural Guidance and Guarantee Fund (hereinafter called ‘the Fund’) is to finance intervention intended to stabilize the agricultural markets. Article 3 states that intervention intended to stabilize the agricultural markets, undertaken according to Community rules within the framework of the common organization of agricultural markets, is to be financed under Article 1 (2) (b).

2. The main elements of a common fisheries policy were set out in 1970 by Regulation No 2141/70 of the Council of 20 October 1970 laying down a common structural policy for the fishing industry (Official Journal, English Special Edition 1970 (III), p. 703) and Regulation No 2142/70 of the Council of 20 October 1970 on the common organization of the market in fishery products (Official Journal, English Special Edition 1970 (III), p. 707). Articles 100 to 102 of the Act of Accession of 1972 confirmed and partly amended them in relation to access to fish stocks. In particular Article 102 provided that from the sixth year after accession at the latest, the Council, acting on a proposal from the Commission, was to determine conditions for fishing with a view to ensuring protection of the fishing grounds and conservation of the biological resources of the sea.

3. Regulations Nos 2141/70 and 2142/70 were replaced by Council Regulation No 100/76 of 19 January 1976 on the common organization of the market in fishery products (Official Journal, L 20, p. 1) and Council Regulation No 101/76 of 19 January 1976 laying down a common structural policy for the fishing industry (Official Journal, L 20, p. 19). The last recital in the preamble to Regulation No 100/76 stated that the expenditure incurred by the Member States as a result of the obligations arising out of the application of the regulation was to fall on the Community in accordance with the provisions of Articles 2 and 3 of Regulation No 729/70. Regulation No 100/76 contained no provision similar to that of Article 26 (2) of Council Regulation No 3796/81 of 29 December 1981 on the common organization of the market in fishery products (Official Journal, L 379, p. 1), which was applicable from 1982. Article 26 (2) provides that intervention measures are to be financed in respect of products from a stock or group of stocks only up to the limit of any quantities allocated to the Member State in question from the total volume of allowable catches for the stock or group of stocks in question. Article 1 of Regulation No 101/76 provided that common rules should be laid down for fishing in maritime waters to promote harmonious and balanced development of the fishing industry within the general economy and to encourage rational use of the biological resources of the sea and of inland waters. Article 4 provided that where there was a risk of over-fishing of certain stocks in the maritime waters of the Member States, the Council, acting in accordance with the procedure provided for in Article 43 (2) of the Treaty on a proposal from the Commission, might adopt the necessary conservation measures. In particular, those measures might include restrictions relating to the catching of certain species, to areas, to fishing seasons, to methods of fishing and to fishing gear.

4. On 6 April 1976 the Council adopted Regulation No 811/76 temporarily authorizing certain systems of catch quotas in the fisheries sector (Official Journal, L 94, p. 1), in which it authorized Member States to limit the catches of their fishing fleets in accordance with international undertakings contracted or to be contracted. The first recital to the regulation stated that ‘the fishery resources of the sea would be considerably endangered if catches were not controlled; ... the rational development of the production of fishery products might be disturbed if no limit were placed on the size of landings’.

5. On 6 October 1976 the Commission sent the Council a proposal for a regulation establishing a Community system of conservation and management of fishery resources, on which the Council was not able to reach agreement, however, until 1983.

6. On 3 November 1976 the Council adopted what is known as the ‘Hague Resolution’ and in Annex VI thereto stated that, pending the implementation of the Community measures then in preparation, the Member States would not take any unilateral measures in respect of the conservation of resources. It provided, however, that if no agreement was reached for 1977 within the international fisheries commissions and if subsequently no autonomous Community measures could be adopted immediately, the Member States would then adopt, as an interim measure and in a form which avoided discrimination, appropriate measures to ensure the protection of resources situated in the fishing zones off their coasts. Before adopting such measures, the Member State concerned would seek the approval of the Commission, which had to be consulted at all stages of the procedures.

7. On 18 February 1977 the Council adopted Regulation No 350/77 laying down certain interim measures for the conservation and management of fishery resources (Official Journal, L 48, p. 28), applicable until 31 December 1977 at the latest.

8. At a meeting on 31 January 1978 the Council approved the Commission communication according to which, in the absence of a common system, national measures could only be taken in so far as they were strictly necessary for the conservation and management of fishery resources and were nondiscriminatory and in conformity with the Treaty, and if the approval of the Commission had been sought beforehand (Official Journal, C 154, p. 5).

9. On 19 December 1978 the Council adopted interim measures applicable until a definite agreement was reached or, at the latest, until the end of March 1979.

10. On 1 January 1979 the transitional period provided for in Article 102 of the 1972 Act of Accession expired. On that date power to take measures intended to conserve maritime resources was to vest fully and definitively in the Community. Because it was not able to reach agreement on the Commission proposals, the Council adopted fresh interim measures during 1979 and in March 1980.

11. On 30 May 1980 the Council issued a declaration on the common fisheries policy (Official Journal, C 158, p. 2) in which it undertook to adopt a common overall fisheries policy by 1 January 1981 at the latest. In compliance with the Treaties and in conformity with the Resolution of 3 November 1976 (the Hague Agreement) the policy was to be based on rational and nondiscriminatory Community measures for the management of resources and conservation and reconstitution of stocks and fair distribution of catches. Council Decision 80/601 of 16 June 1980, based on the Treaties, concerned fishery activities in waters under the sovereignty or jurisdiction of Member States and was adopted on a temporary basis pending the adoption of permanent Community measures (Official Journal, L 160, p. 48), referred to that declaration and adopted fresh interim measures applicable until 31 July 1980. Council Decision 80/993 of 28 October 1980, based on the Treaties, concerned fishery activities in waters under the sovereignty or jurisdiction of Member States and was adopted on a temporary basis pending the adoption of permanent Community measures (Official Journal, L 298, p. 38); it applied until 20 December 1980. The Council referred in the decision to the undertaking it had given at its meeting on 30 May 1980. Pending its decision in the matter and in view of both Article 102 of the Act of Accession and the need to protect biological resources and to maintain suitable relations with third countries in matters relating to fisheries, the Council decided on the following interim measures which would apply until 20 December 1980 at the latest: At its meeting on 15 to 17 December 1980 the Council adopted a declaration in the minutes to the effect that the Member States would conduct their fishing activities in such a way that the catches made by their ships during the interim period would take into account the total allowable catches (TAC) submitted for 1981 by the Commission to the Council in its proposals of 18 November and 16 December 1980.

‘(1) Member States shall conduct their fishing activities in such a way as to take into account the total allowable catches (TACs) and part of the TACs made available to third countries under agreements or arrangements made with them, as given in Regulation (EEC) No 754/80, and in the Commission's amended proposals of 12 September and 24 October 1980, and shall inform the Commission in accordance with Regulation (EEC) No 753/80. The catches taken in the interim period will be offset against the allocations eventually decided upon by the Council for 1980.

2) As regards the technical measures for the conservation and surveillance of fishery resources in geographical areas not covered by Council Regulation (EEC) No 2527/80, Member States shall apply the same measures as they applied on 3 November 1976, and other measures taken in accordance with the procedures and criteria of Annex VI to the Council Resolution of 3 November 1976.’

12. In the conservation of resources the Community had also to take into account its international obligations. In 1981 the Community was party to a convention concerning multilateral cooperation in the North-West Atlantic Fisheries and to bilateral treaties with Canada, Spain, the United States, the Faeroe Islands and Norway.

13. In 1981 the Commission repeatedly amended its TAC proposals and ultimately submitted to the Council on 24 July 1981: (i) a proposal for a regulation concerning, for certain fish stocks occurring in the Community fishing zone, the fixing of the total allowable catches for 1981 and the shares available to the Community (Official Journal, C 224, p. 2); (ii) an amendment to the proposal for a Council regulation fixing the conditions governing fishing operations when taking the total allowable catches for 1981 (Official Journal, C 224, p. 10), the proposal for a regulation submitted to the Council on 6 March 1981 (Official Journal, C 224, p. 7); and (iii) a proposal for a regulation concerning the distribution among the Member States of the total catch possibilities available to the Community in 1981 of stocks or groups of stocks occurring in the Community fishing zone (Official Journal, C 224, p. 11). In a declaration submitted to the Council on 27 July 1981 (Official Journal, C 224, p. 1) the Commission set out the position resulting from the absence of agreement on its proposals to fix the TACs and quotas for 1981. The Commission recalled that it had certain rights and duties under Article 155 of the Treaty, as had been confirmed by the Court inter alia in its judgment of 5 May 1981 in Case 804/79 Commission v United Kingdom [1981] ECR 1045. In view of the overriding public interest and as a precautionary measure, pending a final decision by the Council, the Commission therefore called upon all Member States in pursuance of their rights and duties to conduct their fishing activities in such a way as to ensure compliance with the Commission's proposals. The Commission also declared that it was determined to use all the means in its power to ensure the respect by Member States of those proposals, which it considered in the circumstances to be legally binding upon the Member States. It is apparent from the minutes of the Council meeting on 27 July 1981 (PV/Cons. 37th Fishing 197, 8682/81, pp. 8 and 9) that the Commission's declaration was challenged by the Council's legal department and various Member States, including France, and that finally the Council agreed to discuss the TACs and quotas proposed for 1981 at its next meeting. In a letter to the Member States dated 28 July 1981 the Commission drew attention to its declaration and added that it believed it was obliged not merely to approve or disapprove in the light of its proposals national measures as and when they might be submitted, but also to require all Member States to take steps to comply with those proposals. The Commission stated that its position was dictated by the necessity of controlling fishing activity in the interim period; pending the next meeting of the Council the Commission intended to give its approval to catches which amounted to not more than three-quarters of the amount of the quotas proposed by the Commission. The Commission called upon all Member States to indicate not later than 24 August 1981 the measures which they proposed to take in order to ensure that that general rule was respected in the interim period.

14. From 1 January 1982 until 31 March 1982 fishing activities in Community waters were once again governed by an interim Council decision, Decision 81/1052 of 29 December 1981 (Official Journal, L 379, p. 52) requiring Member States to take into account the TACs proposed by the Commission on 24 July 1981. Subsequently the Council adopted other provisional measures for 1982.

15. On 25 January 1983 the Council adopted Regulation No 170/83 of 25 January 1983 establishing a Community system for the conservation and management of fishery resources (Official Journal, L 24, p. 1). Article 3 provides for the fixing of TACs and Article 4 for the distribution of the available share of the TACs between the Member States. In application of that regulation the Council subsequently fixed the necessary TACs and quotas. However, it did not fix them for 1981.

16. In a telex message of 29 May 1984 the Commission informed the French Government that some of the expenditure for 1981 declared in the fisheries sector could not be financed out of the Fund since it had not been incurred in accordance with Community law, and that it considered all fish caught outside the quotas laid down by the Commission as ineligible for Community financing unless it was shown by the Member State that it had not given rise to Community expenditure. At issue were 6402.420 tonnes of fish of various kinds for the sum of FF 8015553.86.

17. The method adopted by the Commission for clearing accounts of the Fund for 1981 may be described as follows: since it did not have information to enable it to determine the quantity of fish caught outside the quota which gave rise to Community expense, the Commission regarded all fish caught in excess of the quota as involving expense to the Fund unless evidence was shown to the contrary. However, when it submitted the figures based on that maximum calculation to the Member States concerned it invited them to check the calculations and to submit any contradictory evidence for the purpose of correcting the figures. Expenditure declared as financial compensation for withdrawals (intervention measures within the meaning of Article 3 of Regulation No 729/70) was considered in the following manner: the Commission first checked whether, for a particular species of fish, the quantities caught exceeded the proposed quotas. If the whole of a particular species which had been the subject of withdrawal was less than or equal to the excess found, the financial compensation granted for that species was held not to be payable out of the Fund. If the quantity of products withdrawn was greater than that by which the relevant quota had been exceeded, the amount ineligible for Community financing was determined by multiplying the quantity in excess of the quota by the highest compensation rate for that species of fish.

18. In a letter dated 6 July 1984 the French Government replied that it could in no event share the Commission's opinion. It requested the Commission to inform it precisely of the figures which it had used and the methods of calculation which it had applied to reach that result. The Commission replied by telex on 27 August 1984.

19. By a memorandum of 5 September 1985 the Commission notified the French Government of its decision of 28 August 1985 on the clearance of the accounts presented by the French Republic in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1981. The Commission refused to give clearance for intervention payments of FF 8015553.86 in respect of a total of 6402.420 tonnes of various fish.

II — Written procedure and conclusions of the parties

1. The application by the French Republic was lodged at the Court Registry on 12 November 1985.

2. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.

3. The French Republic, the applicant, claims that the Court should: (i) Declare void Commission Decision 85/456/EEC of 28 August 1985 on the clearance of the accounts presented by the French Republic in respect of the European Agricultural Guidance and Guarantee Fund, Guarantee Section, expenditure for 1981; (ii) Order the defendant to pay the costs.

4. The Commission, the defendant, contends that the Court should: (i) Declare the action inadmissible in so far as it relates to matters in the clearance of the accounts of the Fund for 1981 other than fishery products; (ii) Dismiss the action as unfounded; (iii) Order the applicant to pay the costs.

III — Submissions and arguments of the parties

A — The subject-matter of the action

1. With regard to the Commission's conclusions the French Republic, the applicant, states that its action concerns primarily the refusal to clear the accounts connected with the alleged disregard of quotas, in the amount of FF 8015553.86, but that that figure is included in two sums referred to in the Commission decision which would necessarily be affected if the Court were to consider the refusal to clear that amount unlawful. Those amounts are: (1) the amount recognized as chargeable to the Fund by Article 1 (1) of the decision; (2) the financial resources available at the end of 1981 referred to in Article 2 of the decision. In the applicant's view the subject-matter of the application is thus: (i) the refusal to give clearance for FF 8015553.86; (ii) Article 1 (1) of the decision in its entirety; (iii) Article 2 of the decision in so far as it refers to FF 1438032469.86.

2. In the Commission's view the application does not relate to the whole of the decision but only to the refusal to give clearance for FF 8015553.86 for fishery products. Although its conclusions remain unaltered the Commission admits, however, in the rejoinder that the other figures may be affected if the figure of FF 8015553.86 is challenged and considers that in fact the parties are not at issue over the subject-matter of the action.

B — The substance of the action

The French Republic contends that the Commission Decision of 28 August 1985 infringes Community law and in particular Regulation No 729/70. The main issue in the action, which is based on Article 173 of the EEC Treaty, is Regulation No 729/70 and the power to take measures for the conservation of fishery resources in maritime waters.

In the reply to the defence the applicant submits, in the alternative, that the method used for calculating the sums at issue is wrong.

Regulation No 729/70

1. The French Republic states that the intervention payments it made in 1981 to stabilize markets were made pursuant to Article 3 of Regulation No 729/70, according to Community rules and within the framework of the common organization of the markets for fishery products as laid down at the time by Regulation No 100/76. The obligations imposed on Member States by that regulation did not include observance of quotas since the rules on quotas were not introduced by the Council until 25 January 1983.

2. The Commission contends that the reference to Articles 2 and 3 of Regulation No 729/70 in Regulation No 100/76 indicates that the Council did not intend to derogate from the basic principle governing the Fund, that only expenditure incurred in accordance with the Community rules is payable by the Community. In that respect it is not sufficient to observe the technical rules concerning intervention and export refunds; it is necessary to comply with all the obligations in a particular sector. The question is thus whether the Member States were under an obligation in 1981 to comply with the Commission's proposals.

The power to take measures for the conservation of fishery resources of maritime waters

1. The French Republic claims that it was not bound to take measures for the conservation of resources and that in not doing so it was acting in compliance with Community law. It takes the view that in 1981 power to take such measures was vested in the Community and more particularly the Council; in the absence of binding measures taken by the Council neither the Commission nor the Member States could take conservation measures in its place. (a) The French Republic points out that the Court held, in its judgment of 5 May 1981 in Case 804/79 Commission v United Kingdom [1981] ECR 1045, that the power to adopt, as part of the common fisheries policy, measures relating to the conservation of the resources of the sea belongs fully and definitively to the Community. Member States are therefore no longer entitled to exercise any power of their own in the matter of conservation measures in the waters under their jurisdiction. If the Community is unable to exercise that power, its failure to do so could not in any case restore to the Member States the power and freedom to act unilaterally in this field. In the applicant's view the Community power in relation to fishery policy is exercised by the Council, as is apparent from Article 43 of the EEC Treaty, Regulation No 101/76 and Article 102 of the Act of Accession of 21 January 1972. The Council acts on a proposal from the Commission to determine the conditions under which fishing is to be carried out in order to ensure the protection of fishing grounds and the conservation of the biological resources of the sea. The Court mentioned that power in its judgment of 14 February 1984 in Case 24/83 Gewiese and Mehlich v Scott Mackenzie [1984] ECR 817. The applicant maintains that in 1981 there were no binding rules of the Council requiring Member States to observe fishing quotas. All that existed in 1981 were either rules which had sometimes a certain binding force but were no longer applicable, or measures which were applicable but were not binding. In the opinion of the French Republic, Annex VI to the Hague Resolution adopted by the Council on 3 November 1976 is binding only in part: (1) there is in the first place the principle that the States may not take unilateral conservation measures if Community measures have not been taken; (2) however, in that event, the States may adopt interim protective measures; (3) in that case, the Member State concerned must seek the approval of the Commission. From that it may be inferred that: (i) although points (1) and (3) appear to be binding, point (2) merely enables the Member States to take protective measures; (ii) in adopting that resolution the Council intended that it should apply during the transitional period provided for by Article 102 of the Act of Accession, that is to say until 1 January 1979. The applicant states that when it became clear to the Council that it would not be able to take the measures provided for in Article 102 within that period, it opted to extend the validity of the Hague Resolution by adopting on 19 December 1978 an interim decision applicable from 1 January 1979. Subsequently, the Council adopted further interim measures, but no interim decision was applied in 1981 or more particularly between 20 December 1980 and 1 January 1982. The applicant claims that the declaration adopted by the Council in the minutes of the session of 16 and 17 December 1980 is not a Council measure which is binding. In the first place the proposals in question are those submitted by the Commission to the Council on 18 November and 16 December 1980 and not those of 6 March and 24 July 1981. It is the latter, however, which the Commission considers to be legally binding on the Member States. As Advocate General Sir Gordon Slynn observed in his Opinion in Case 24/83 (cited above), the proposals to which the declaration in the Council minutes referred ‘were, however, for a negative TAC and the minute cannot be read as imposing an obligation on Member States to comply with whatever proposals the Commission subsequently made.’ The proposals are thus merely statements to the effect that the Member States should take account of the Commission's proposals. It is obvious that if the Council had intended that the measures should be binding it would have adopted them by means of a regulation. (b) In the view of the French Republic the Commission in its declaration to the Council of 27 July 1981 not only requested the Member States to comply with the proposals annexed to its declaration but also stated that it considered that those proposals were legally binding on them. The applicant considers that the Commission had no power to make its own proposals binding. Article 155 of the Treaty gives it power to take binding decisions only when expressly empowered to do so by the Treaty or the Council and the only power which the Commission has in the matter is to submit proposals to the Council pursuant to Articles 43 of the EEC Treaty and 102 of the Act of Accession. A proposal by the Commission could be binding only if the Council made it so. To accept that the Commission could, motu proprio, make its proposals binding would create a precedent which would threaten the balance of power between the Community institutions. It must also be noted that formal and detailed proposals for quotas were submitted to the Council only on 24 July 1981. It would therefore have been impossible to observe them before that date. In the absence of known quotas it would also have been difficult to keep within the total allowable catch. If it were accepted that the Commission's declaration made its proposals binding they would also be retroactive. In view of the difficulty of foreseeing such an attitude on the part of the Commission before the beginning of 1981 it may be asked whether the Commission observed the principle of legitimate expectations. (c) The French Republic argues that the Member States could not act in place of the Community. The judgment of 10 July 1980 in Case 32/79 Commission v United Kingdom [1980] ECR 2403 was given in relation to facts which occurred before 1 January 1979, when the legal position was not the same as in 1981. It is clear from the case-law of the Court, in particular the judgment of 5 May 1981 in Case 804/79, that Member States are no longer entitled to exercise any power of their own in the matter of conservation measures in the waters under their jurisdiction; there is a limited derogation from that principle to the extent that Member States may, if they think it necessary, take certain conservation measures of a limited scope, but they are under no obligation to do so. The French Republic cannot accept the Commission's argument that the Member States were not only authorized but under an obligation to adopt conservation measures in accordance with the proposals made by the Commission to the Council in relation to quotas. A person cannot lawfully be required to adopt a measure which he has no power to adopt. In addition, that would mean that there is no difference between the state of Community law before 1 January 1979 and what was established afterwards. The Commission put forward a very different argument in Case 269/80 Regina v Tymen [1981] ECR 3079, which the Court adopted in its judgment of 16 December 1981. In paragraph 11 of the judgment the Court observed that to accept the lawfulness of national measures adopted in the Community's sphere of competence solely because of the existence of an identical Community proposal would not only be contrary to legal certainty but would lead to a distortion of the division of powers between the Community and the Member States and would thus adversely affect the ^ essential balances established by the Treaty. The applicant claims that the Commission's proposals to the Council of 27 July 1981 were not within the limited scope referred to in the aforesaid judgment of 5 May 1981 in Case 804/79, but were more ambitious. The first proposal, dated 24 July 1981, was concerned with fixing the total allowable catches for 1981 and the share available to the Community of the stocks of 27 species of fish. The second proposal, dated 6 March 1981, fixed in detail the conditions governing fishing when taking the total allowable catches for 1981. The last proposal, dated 24 July 1981, fixing fishing quotas for 1981, made an important amendment to the previous law which until 20 December 1980 had been based on an interim decision of the Council of 20 October 1980 requesting Member States to take account of the total allowable catch and not previously fixed quotas.

2. The Commission contends that when in 1981 it requested the States to apply its proposals on total allowable catches and quotas it expressly referred to the case-law of the Court. (a) In paragraph 25 of its judgment of 10 July 1980 in Case 32/79 the Court defined the obligations of the Member States as follows: ‘Both Article 102 of the Act of Accession and Council Regulation (EEC) No 101/76, in particular Article 4 thereof, in the same way as Annex VI to the Hague Resolution and the Council declaration of 31 January 1978 are based on the twofold assumption that measures must be adopted... so as to meet established conservation needs and that if those measures cannot be introduced in good time on a Community basis the Member States not only have the right but are also under a duty to act in the interests of the Community.’ In its judgment of 5 May 1981 in Case 804/79 the Court stated that the failure of the Council to act could not in any case restore to the Member States the power and freedom to act unilaterally in this field (paragraph 20) and that conservation measures must be defined by means of all the available elements of law, even though fragmentary, and by having regard to the structural principles on which the Community is founded. Those principles require the Community to retain in all circumstances its capacity to comply with its responsibilities, subject to the observance of the essential balances intended by the Treaty (paragraph 23). In paragraph 25 of its judgment the Court referred to the Commission's proposals with regard to the interim measures adopted by the Council and several times mentioned the Commission's role when the Member States adopted conservation measures (paragraphs 27, 28 and 30 to 32); in paragraph 31 it referred to the obligation of all Member States in the circumstances to undertake detailed consultations with the Commission and to seek its approval in good faith, and their duty not to lay down national conservation measures in spite of objections, reservations or conditions which might be formulated by the Commission. (b) In view of those judgments the Commission considers that it was justified in 1981 in requesting the Member States to comply with its proposals. It is clear both from Article 102 of the Act of Accession and the various measures adopted by the Council in the field of conservation of maritime resources that such conservation is one of the fundamental objectives of Community policy in relation to fishing. The Council has itself several times admitted that the fishery resources of the sea are seriously threatened by uncontrolled catches. Whilst power to adopt measures in this area is vested in the Community, the Member States are responsible for implementing the Community conservation measures. If the Council fails to act the obligation continues to exist, as the Court recognized in its judgment of 5 May 1981 in Case 804/79. The Council's failure to act can in no event restore to the Member States power and freedom to act unilaterally in the field. It is clear that such measures can be of use only if they are applied throughout the maritime area concerned. It follows, therefore, not only that the Member States cannot adopt a conservation measure at will but also that they must adopt the provisions necessary to ensure that their fishing activities do not cause irremediable harm to the fishery resources of maritime waters, whether they are Community fishing waters or not. The Commission states that conservation measures must be implemented in accordance with the rules adopted by the Council on the basis of Article 43 of the EEC Treaty. When it was unable to adopt the necessary rules it was reasonable for the Council to adopt interim decisions. In the absence of any such decisions in 1981 the Commission, no less reasonably, requested the Member States to observe as an interim measure the total allowable catches and quotas recommended in its own proposals. The Court stated in paragraphs 27 to 31 of its judgment of 5 May 1981 in Case 804/79 that the Member States should, in the absence of appropriate action by the Council, adopt interim measures in collaboration with the Commission. They should not only consult it and seek its collaboration but also take account of any objections, reservations or conditions which it might make. In that context the Commission considers that the question is not whether or not Annex VI to the Hague Resolution and the Council declaration adopted at its session of 15 to 17 December 1980 were binding; what is important is that the Council expressed therein the fundamental principle that Member States may not act unilaterally with regard to conservation measures. The Commission contends that it would have been guilty of poor management if it had waited for the Member States to inform it of their intentions before making known to each of them its objections or reservations. To wait would have been pointless if a Member State had decided to take no action. Only a general assessment was possible, and that general assessment was contained in the proposals. Any national measure which was inconsistent with it was automatically considered as calling for objections and reservations. The Commission states that that was the scope of its declaration to the Council on 27 July 1981 in which it stated that it considered its proposals to be ‘legally binding’. Taken literally and out of context that expression might obviously be open to objection. The declaration, however, simply expresses the logical conclusion of the reasoning set out above. The importance of the Commission's proposals in the matter has been stressed by the Court, which pointed out in paragraph 25 of the judgment of 5 May 1981 in Case 804/79 the reference to them in the interim decisions of the Council. The Commission states that the decision and the declaration of the Council adopted at the end of 1980 required Member States to comply with the proposals which the Commission had submitted to the Council for 1981. In the absence of an interim decision by the Council, therefore, the Commission considers that it was justified in referring to its proposals, which it had in the meantime amended in the light of scientific opinions obtained from international organizations of which either the Community or the Member States were members and from its own Scientific and Technical Committee for Fisheries. The Commission's proposals concerning conservation measures also took account of the Community's obligations to nonmember countries and international fishing organizations. The judgments of the Court of 10 July 1980 in Case 32/79 and 5 May 1981 in Case 804/79 show that when power has been vested in the Community it is entirely reasonable to require Member States not only not to act unilaterally but, if necessary, to take specific conservation measures as part of joint Community action. The Commission's position has always been unequivocal: it referred clearly to the obligations of the Member States both in its declaration of 27 July 1981 and in its letter of 28 July 1981. In the Commission's view the fact that the Member States' obligation to act is spelt out in the Commission's proposals has its origin in the reference made by the Court, in paragraph 31 of its judgment of 5 May 1981 in Case 804/79, to the objections, reservations and conditions of the Commission. Instead of referring to its ‘proposals’ in its declaration the Commission considers that it could have set out the quotas notified to the Council but that would in no way have altered its request to the Member States to observe the quotas in question. With regard to the applicant's reference to the Commission's position in Case 269/80 (Regina v Tymen, cited above), the Commission observes that those proposals were submitted in a different context. Although it was clear that a proposal could not be regarded as approving a unilateral national measure in an area for which the Community was responsible, the Commission considers that that may be so where, as in the present case, it refers to its proposals in the exercise of powers which the Court recognizes that it has in the field of conservation measures. In paragraph 12 of its judgment of 16 December 1981 in Case 269/80 the Court confirmed the Commission's role in the matter. With regard to the content of the Commission's proposals, which the applicant claims were not of limited scope as required by the case-law of the Court, the Commission states that in view of the interim decisions already adopted by the Council at the end of 1980 and which were already binding on the Member States, the alterations sought by the Commission, as expressed in July 1981, were indeed of limited scope.

The calculation of the sums in issue

1. Alternatively the French Republic considers that the method of calculating the sums at issue is wrong. It submits that Regulation No 100/76 imposes no obligation on Member States to observe quotas. It may therefore be asked whether the Commission is seeking to apply Article 26 of Regulation No 3796/81, which did not enter into force until 1 January 1983. The applicant doubts that it may apply retroactively to 1981. Moreover, to its knowledge, the detailed rules for applying Article 26 have not yet been adopted. In a memorandum dated 12 June 1985 the Commission interpreted Article 26 as follows: ‘Intervention measures may be taken ... in respect of catches made before the date on which the quota was exhausted’. It may be concluded that only quantities withdrawn from the market after the quota was exceeded by a Member State are excluded from financing from the Fund. The total reached by the Commission is therefore in any event wrong since it includes quantities withdrawn from the market although the French quota was not exhausted.

2. The Commission contends that although it considered it relevant to show the Court in the statement of the facts the way it calculated the expenditure which was disallowed, it did not plead that argument in its defence because the French Republic's application in no way questioned the method of calculation: it was confined to challenging the Commission's refusal as a matter of principle. The challenge in the reply to the method of calculating the contested sums is thus a fresh issue the raising of which is barred by Article 42 (2) of the Rules of Procedure. In any event it is clear from paragraphs 28 to 32 of the judgment of 12 July 1984 in Case 49/83 Luxembourg v Commission [1984] ECR 2931 that it is incumbent upon Member States in the clearance of accounts to establish their figures precisely. In the present case the French Republic is not denying that the quota was exceeded. It should therefore either have proved that the criteria and views of the Commission were wrong or shown by means of precise figures that the amounts proposed by the Commission were incorrect. Expenditure in respect of which the Member State has not removed all doubts cannot be financed by the Community. In answer to the questions put by the applicant the Commission states that it did not intend to apply to 1981 either Article 26 (2) of Regulation No 3796/81 or the interpretative note of 12 June 1985. As regards the method of calculation the Commission confines itself to referring to the summary report for 1981 of 22 October 1984 and to its defence.

F. Schockweiler

Judge-Rapporteur

1 Language of the Case: French.