Report for the Hearing delivered in Case 253/86
I — Background to the dispute
The applicant owns a vineyard in Portugal. On 20 June 1986 it submitted two identical applications to the Secretary of State for Agricultural Development and to the Minister for Agriculture, Fisheries and Food in which it requested the grant of premiums for the permanent abandonment of vine-growing. The two applications were accompanied by applications concerning the classification of the area under vines concerned.
In its applications, the applicant relied upon the provisions of Council Regulation No 456/80 of 18 February 1980 on the granting of temporary and permanent abandonment premiums in respect of certain areas under vines and of premiums for the renunciation of replanting (Official Journal 1980, L 57, p. 16) and Council Regulation No 797/85 of 12 March 1985 on improving the efficiency of agricultural structures (Official Journal 1985, L 93, p. 1).
On 8 July 1986 the applicant informed the same authorities that, instead of Regulation No 456/80, its application should read Council Regulation No 777/85 of 26 March 1985 on the granting, for the 1985/86 to 1989/90 wine years, of permanent abandonment premiums in respect of certain areas under vines.
By letter of 31 July 1986 the Secretary of State for Agricultural Development refused the applications, informing the applicant that Regulation No 777/85 was not applicable to Portugal by reason of Council Regulation No 2239/86 of 14 July 1986 on a specific common measure to improve winegrowing structures in Portugal.
II — The Community provisions at issue
Article 1 (1) of Regulation No 777/85 provides as follows: ‘Vine-growers cultivating areas under vines ... shall, upon application and subject to the conditions laid down in this regulation, qualify during the wine years 1985/86 to 1989/90 for a premium for the permanent abandonment of vine-growing ...’.
Article 3 of Regulation No 777/85 lays down a number of circumstances in which the permanent abandonment premium shall not be granted.
Article 4 (1) of the regulation provides as follows: ‘Applications for premiums must be submitted to the departments designated by the Member States before 31 December of each wine year ...’. Article 4 (2) states that: ‘The grant of the premium shall be subject to a written declaration in which the applicant undertakes : by 15 May of the year following that in which the application is submitted, to grub up or have grubbed up the vines on the areas for which the premium has been requested’.
As regards Spain and Portugal, the time-limit for applications to be submitted fixed by Article 4, cited above, was extended for the 1985/86 wine year from 31 December 1985 to 28 February 1986 by Council Regulation No 3775/85 (Official Journal 1985, L 362, p. 39).
According to Article 1 (6) of Council Regulation No 337/79 of 5 February 1979 on the common organization of the market in wine (Official Journal 1979, L 54, p. 1), as amended by Council Regulation No 1595/83 of 14 June 1983 (Official Journal 1983, L 163, p. 48), the winegrowing years are to begin on 1 September each year and end on 31 August of the following year.
Article 7 of Regulation No 777/85 provides that the Council may decide to alter the amount of the premium for the permanent abandonment of vine-growing.
Council Regulation No 2239/86 of 14 July 1986 on a specific common measure to improve vine-growing structures in Portugal provides for a number of restructuring operations, including the grant of assistance for the grubbing of vines. Article 6(1) provides that the vine growers cultivating areas under vines specified by the regulation ‘shall qualify, on application, for a premium for the permanent abandonment of vine-growing’.
Article 6 (6) of the regulation provides that ‘For the duration of the common measure, vine-growers may not qualify for the permanent abandonment premium provided for in Regulation (EEC) No 777/85’.
Regulation No 2239/86 entered into force on 21 July 1986.
III — Written procedure and conclusions of the parties
The action brought by Sociedade Agropecuária Vicente Nobre, Lda. was lodged at the Court Registry on 1 October 1986.
By orders of 28 January 1987 and 11 May 1987 the Commission of the European Communities and the Portuguese Republic respectively were allowed to intervene in the action in support of the conclusions of the defendant.
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 enquiry. By decision of 15 October 1987 pursuant to Article 95 (1) and (2) of the Rules of Procedure, the Court assigned the case to the Sixth Chamber.
The applicant claims that the Court should:
Declare void Article 6 (6) of Council Regulation No 2239/86 of 14 July 1986;
In the alternative, order the Community to make good the damage suffered by the applicant as a result of the non-application to it of Council Regulation No 777/85 of 26 March 1985;
Order the Council to pay the costs.
The defendant contends that the Court should:
Dismiss the application as inadmissible and in the alternative as unfounded;
Order the applicant to pay the costs.
The Portuguese Republic, intervener, contends that the Court should:
Dismiss the application as inadmissible and, in the alternative, unfounded;
Dismiss the application for damages as inadmissible and, in the alternative, as unfounded;
Order the applicant to pay the costs.
The Commission, intervener, claims that the Court should:
Dismiss the application as inadmissible and, in the alternative as unfounded;
Order the applicant to pay the costs.
IV — Submissions and arguments of the parties
The applicant claims that the rules on premiums for the permanent abandonment of vine-growing laid down by Regulation No 2239/86 are in several respects less favourable than those laid down by Regulation No 777/85.
In the new regulation, the premiums fixed by reference to the average yield per hectare of the areas under vines are substantially lower than those provided for by Regulation No 777/85. Moreover, Article 6 (4) of Regulation No 2239/86 limits the permanent abandonment premium to an overall area of 15000 hectares without specifying the zones of the Portuguese territory concerned.
The applicant considers that Regulation No 2239/86 not only fails to ensure that the premium will be granted to any person who had submitted an application for a premium before the regulation entered into force but also fails to guarantee the amount to which such person would have been entitled under Regulation No 777/85. The situation of any such person is therefore adversely affected by Article 6 (6) of Regulation No 2239/86.
The applicant stresses that its application is admissible since it was the only person to have introduced an application for the grant of a premium under Regulation No 777/85 at the date of the adoption of Regulation No 2239/86. Consequently, it is directly and individually concerned by Article 6 (6) of the latter regulation.
That provision, which terminates the premiums for the permanent abandonment of vine-growing as provided for by Regulation No 777/85, is in breach of the general principles of Community law on legal certainty, respect for vested rights, non-retroactivity of laws and protection of legitimate expectations.
The applicant claims that it acquired rights under Regulation No 777/85 which were affected by Article 6 (6) of Regulation No 2239/86. The principle that legitimate expectations should be protected precludes Community legislation from having retroactive effect save in exceptional cases. Furthermore, the new rules on the grant of the premium do not contain any transitional measures capable of protecting rights acquired under the old system.
As regards the claim for damages, the applicant claims that it suffered real and effective damage as a result of the termination of the system laid down by Regulation No 777/85. It calculates that its financial loss amounted to ECU 150 000.
The Council contends that the application is inadmissible. In its view, it does not satisfy the conditions laid down by the second paragraph of Article 173 of the Treaty on the admissibility of an application brought by a natural or legal person for a declaration that a regulation is void.
It states that Regulation No 2239/86 is in the nature of a true regulation. The applicant cannot be directly and individually concerned by the regulation in question since it had merely submitted applications which had not been the subject of any decision.
The Council maintains that none of the principles of Community law relied upon by the applicant has been breached. Since the applications for the grant of a premium applied to the 1986/87 wine year, to which Regulation No 2239/86 applies, no right acquired under Regulation No 777/85 can be affected. Furthermore, the applicant cannot rely upon the principle that legitimate expectation should be respected since Article 7 of Regulation No 777/85 expressly provides for the possibility of altering the amount of the premium in question, so that there was no need to include any transitional measure in order to take into account expectations which any individual might have had.
The Council also considers that the application for damages is inadmissible, since the applicant has not fulfilled the requirements laid down by Article 38 (1) (c) of the Rules of Procedure. The application does not contain any basis for establishing the way in which the applicant may have suffered damage.
The Portuguese Republic considers that the application is inadmissible since the applicant could not be directly and individually concerned by Regulation No 2239/86. The regulation lays down rules of general application on the improvement of vine-growing structures in Portugal. No individual interest is affected by Article 6 (6) of the regulation.
As to the substance, it contends that the applicant did not acquire any rights under Regulation No 777/85 so that the principle that legitimate expectation should be protected is not breached. Furthermore, there can be no question of a failure to comply with the principle that laws should not be retroactive because Regulation No 2239/86 applies only to the wine years following its entry into force.
The Portuguese Republic also considers that the claim for damages is not admissible since the grounds on which it is based are not adequately stated, as required by Article 38 (1) (c) of the Rules of Procedure.
The Commission also contends that the application is inadmissible. In its view, the applicant is not individually concerned by Article 6 (6) of Regulation No 2239/86. Since the applications were submitted by the applicant prematurely, that is to say before 1 September 1986, the date on which the 1986/87 winegrowing year commenced, they could not have had any legal effect before that date.
As regards the alleged breach of legitimate expectation, the Commission notes that a trader may not rely upon this principle to challenge a Community provision which amends specified rules before the period of their application unless the individual concerned enjoys rights or has incurred obligations on the basis of the preceding rules. It would be absurd if, by submitting such an application in advance, a person could compel the Community to maintain rules unchanged from one year to the next, regardless of the economic circumstances.
The Commission also stresses that the applications submitted by the applicant on 20 June 1986 related to the 1986/87 wine year. That year could not commence until 1 September 1986. The contested regulation entered into force on 21 July 1986, and therefore before those applications could have produced any legal effects. The Commission states that at that time the applicant could not yet have had any right to the premiums for the abandonment of vine-growing provided for by Regulation No 777/85. Consequently, it is wrong to rely upon the principle that legitimate expectation should be protected.
Finally, the Commission contends that although Article 263 (2) (b) of the Act of Accession of Spain and Portugal provides that the Community rules in the sociostructural field apply as from accession to the Portuguese wine sector, Protocol No 24 on agricultural structures in Portugal provides that ‘the conditions for eligibility for Community financing must be adapted to the specific features of the situation in Portugal’.
The Commission also considers that the claim for damages is inadmissible and in this respect concurs with the Council.
K. Bahlmann
Judge-Rapporteur
1 Language of the Case: Portuguese.