Judgment — ECLI:EU:C:1998:548
Date: 1998-11-19
Language of the case: Spanish
Court formation: Sixth Chamber
Based on: Treaty establishing the European Economic Community (1957)
Subject matter: External relations;Commercial policy
Concepts: Statement of reasons;Pleas in law;Principle of the protection of legitimate expectations;General
Procedure: Action for annulment - unfounded
Origin: Spain

summary form wassufficient to justify a decision rejecting a request for assistance from the European Social Fund, a subsequent decision reducing the amount of the assistance originallyapproved, thus entailing more serious consequences for the applicant, must clearlystate the grounds justifying it. 20. The Spanish Government considers that, although those judgments concerndecisions of the Commission, they are of general application since the principlesthey lay down are not confined by the Court to certain specied Community rulesand the purpose of the obligation to state reasons is not conditional on the natureof the act. 21. So far as concerns the legal context of the contested regulation, the SpanishGovernment observes that the quota in issue was introduced by Regulation No519/94 as part of a vast programme intended to harmonise the commercial rulesapplying to trade with State-trading countries, on account of 'the sensitivity ofcertain sectors of Community industry (sixth recital in the preamble to thatregulation). The level of that quota was set having regard to the trend reflectingan exponential increase in imports of Chinese toys and the state of the Communitymarket. 22. In the Spanish Government's view, in the contested regulation the Council raisedthe quota in question by 28.64% just four months after the entry into force ofRegulation No 519/94 without giving adequate reasons for that increase. Inparticular, the amendments made do not appear to be justified by any changes inthe circumstances which led to the fixing of the original quota. 23. The contested regulation thus introduced a significant alteration but did not provideany reasons not only to identify the factors which led to the adoption of themeasure but also to explain its effect, so as to enable the persons concerned todefend their rights and the Court to exercise its power of review. The referencein the third recital in the preamble to 'disruptions ... in trade with the People'sRepublic of China is, in the applicant's view, no more than a factual observationinsufficient to justify the manner in which the institution exercises the widediscretion it enjoys (see Compagnia Italiana Alcool v Commission, cited above). 24. The Council argues that the Spanish Government is attempting to apply the Court'scase-law on the statement of reasons for decisions of the Commission to this case,which concerns a Council regulation, whereas an act of that kind is not necessarilysubject to the same requirements as a decision. The recitals in the preamble to thecontested regulation are detailed and exhaustive, and are not confined to a merereference to disruptions in trade. On the contrary, they clearly demonstrate whatled the Council to adopt the measure in question and they thus comply with theobligation to state reasons laid down in Article 190 of the Treaty. 25. Moreover, according to the Council, since the contested regulation merely altersthe level of a quota fixed by Regulation No 519/94, it has not had a significanteffect on the present situation. In any event, it is for the Community institutions to assess any disruptions affecting the economic situation in which the regulationis adopted and to decide on the measures to be taken as a result. 26. The Commission likewise maintains that the reasons stated in the preamble to thecontested regulation are sufficiently clear and precise. The adjustment to theamount of the quota for 1994 was necessary on account of the disruptions in tradewith China. In particular, the Council had endeavoured to strike a fair balancebetween all the interests involved, that is to say, between, on the one hand, theneed to protect sectors of the Community industry concerned and, on the other, theneed to maintain an acceptable level of trade with China. Any attempt to reconcilethose interests necessarily involves the exercise of a wide discretion by the Council. 27. Furthermore, although no specific detailed reasons were given for the choice madein respect of the products subject to quota, the chief matters of law and fact onwhich the regulation is based and the reasons which led the Council to adopt itwere set out clearly and unequivocally in the preamble to the contested regulation. 28. In that connection, the Court, as the Council was right to point out, has consistentlyheld (since its judgment in Case 5/67 Beus v Hauptzollamt München [1968] ECR83, at p. 95) that the extent of the requirement to state reasons depends on thenature of the measure in question, and that in the case of measures intended tohave general application the preamble may be limited to indicating the generalsituation which led to its adoption, on the one hand, and the general objectiveswhich it is intended to achieve, on the other. 29. It follows that the case-law cited by the Spanish Government, which relates toCommission decisions of individual concern to the applicants, is irrelevant in thecase of measures of general application such as the contested regulation. 30. Furthermore, the Court has repeatedly held that if the contested measure clearlydiscloses the essential objective pursued by the institution, it would be excessive torequire a specific statement of reasons for the various technical choices made (see,inter alia, Case 250/84 Eridania and Others v Cassa Conguaglio Zucchero [1986]ECR 117, paragraph 38). 31. In the present case, the Council first set out in the preamble to the contestedregulation the circumstances in which it had set the original level of the contestedquota and the aims it had thus pursued. It went on to explain that implementationof the quota had caused disruptions affecting the economic sectors concerned, fromwhich it concluded that the quota should be increased in order to ease thetransition between the previous import regime and the new regime. 32. The statement of reasons must therefore be deemed to contain a clear descriptionof the material situation and of the objectives pursued which, having regard to thecircumstances of the case, would appear to be sufficient. 33. First of all, and without there being any need to ascertain whether the changemade by the contested regulation is one of substance, it must be recalled that theCommunity institutions enjoy a margin of discretion in their choice of the meansneeded to achieve the common commercial policy (see, to this effect, Case 245/81Edeka Zentrale v Germany [1982] ECR 2745, paragraph 27; Case 52/81 Faust vCommission [1982] ECR 3745, paragraph 27; Case 256/84 Koyo Seiko v Council[1987] ECR 1899, paragraph 20; Case 258/84 Nippon Seiko v Council [1987] ECR1923, paragraph 34, and Case 260/84 Minebea v Council [1987] ECR 1975,paragraph 28). 34. In particular, it is for the Council to determine whether, in the light of theconsequences resulting from implementation of the legislation it has enacted, it isnecessary to amend it in certain respects. Accordingly, and in contrast to the viewtaken by the Spanish Government, the Council was not required to set out in thestatement of reasons the changes in the circumstances which led to the fixing of theoriginal quota. 35. Second, since the Council had explained the objectives pursued, it was not requiredto justify the technical choices made, in particular the size of the increase in thecontested quota. 36. It follows that the first plea in law must be rejected. Breach of the principle of protection of legitimate expectations 37. In the second place, the Spanish Government claims that, in adopting the contestedregulation, the Council acted in breach of the principle of protection of legitimateexpectations, inasmuch as it failed to take into account the situation of the MemberStates and of the traders concerned. While there was no change in the actualcircumstances, an alteration in the status quo established by the earlier regulationwas imposed on the traders at very short notice, even though it was not justified bya higher public interest. That resulted in serious damage to all the traders who,having regard to the former regulation, had terminated or postponed theircontracts. 38. The Spanish Government considers itself entitled to plead a breach of thelegitimate expectations of the traders concerned, in particular the Spanish traders,in an action for annulment, especially in view of the fact that the interested partiescould not in the circumstances bring such an action themselves. 39. Furthermore, a prudent and reasonable trader cannot be expected to foresee achange rendering the previous quota entirely devoid of substance barely fourmonths after its introduction. The traders concerned cannot therefore be blamedfor lack of care or be required to bear risks over and above the normal risksinherent in carrying on their activity. 40. The Council is doubtful, first, as to whether it was possible for the contestedregulation to breach any legitimate expectation on the part of the Kingdom ofSpain. Second, even if a Member State were entitled to plead a breach of theprinciple of protection of legitimate expectations on the part of the tradersconcerned, the conclusion would have to be drawn that the Council has respectedthat principle in full. Any introduction or alteration of Community quotas has aneffect on trade and the possibility that the effect on trade will be significant is oneof the economic risks inherent in the sectors concerned and is well known to everyprudent and reasonable trader. Finally, the Council is doubtful as to whetherlegitimate expectations can be relied upon where the only possible consequence forthe traders concerned of the increase in the quota is a different level ofcompetition on the Community toy market. In any event, it is for the applicantgovernment to adduce evidence of the existence of legitimate expectations on thepart of the traders affected by Regulation No 519/94. 41. For its part, the Commission argues that while a prudent and reasonable trader iscapable of foreseeing the adoption of a Community measure likely to affect hisinterests, he cannot plead a breach of the principle of protection of legitimateexpectations when that measure is adopted. In this case, the Spanish Government'sassertions with regard to the breach of legitimate expectations are not based on anyevidence, not even prima facie evidence. In any event, there was nothing thatwould have led a prudent and reasonable trader to believe that the Council wouldnot alter the quota. In addition, both the Spanish authorities and the traders inthat sector played a very active part in the process of drafting both Regulation No519/94 and the contested regulation, which meant that they were aware, well inadvance, of the content of those regulations. Finally, Regulation No 519/94 madeexpress provision not only for quantitative quotas to be introduced but also forthem to be altered, so as to enable them to be adjusted at regular intervals in linewith the changing economic situation. Consequently, it was known that the quotasset might be adjusted, or even abolished, and such action was foreseeable. 42. It must be stated at the outset that, although the Spanish Government alleges thatthe contested regulation adversely affects the legitimate expectations of theMember States as well, in all essential respects its arguments refer to breach of thelegitimate expectations of the traders concerned. Nevertheless, despite the doubtsexpressed by the Council, there is nothing to prevent a Member State fromclaiming in an action for annulment that an act of the institutions frustrates thelegitimate expectations of particular individuals (see, in this respect, Case 278/84Germany v Commission [1987] ECR 1, paragraphs 34 to 36; Case 203/86 Spain vCouncil [1988] ECR 4563, paragraphs 17 to 20, and Case C-169/95 Spain v Council[1997] ECR I-135, paragraphs 49 to 54). 43. As regards the question whether this plea in law is well founded, it should berecalled, first, that since, according to settled case-law, the Community institutionsenjoy a margin of discretion in the choice of the means needed to achieve the common commercial policy, traders cannot claim to have a legitimate expectationthat an existing situation which is capable of being altered by decisions taken bythose institutions within the limits of their discretionary power will be maintained(Edeka Zentrale v Germany, cited above, paragraph 27; Faust v Commission, citedabove, paragraph 27; Koyo Seiko v Council, cited above, paragraph 20; NipponSeiko v Council, cited above, paragraph 34; and Minebea v Council, cited above,paragraph 28). 44. Second, in the present case, it is expressly stated in Regulation No 519/94, inparticular in the sixth recital in the preamble and in Articles 1(4) and 4(3), that thequotas referred to in Annex II could be adjusted. In those circumstances, measuresof the kind laid down by the contested regulation were, by and large, foreseeableby the traders concerned. 45. It follows that, in adopting the contested regulation, the Council has not acted inbreach of the principle of protection of legitimate expectations, with the result thatthis plea in law cannot be upheld. 46. Since neither of the pleas raised by the Spanish Government is well founded, theapplication must be dismissed in its entirety. Costs 47. Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to beordered to pay the costs, if they have been applied for in the successful party'spleadings. Since the Kingdom of Spain has been unsuccessful, it must be orderedto pay the costs, in keeping with the form of order sought by the Council. UnderArticle 69(4) of the Rules of Procedure, the Member States and institutions whichintervene in the proceedings are to bear their own costs. On those grounds, THE COURT (Sixth Chamber) hereby: 1. Dismisses the application; 2. Orders the Kingdom of Spain to pay the costs; 3. Orders the Commission of the European Communities to bear its owncosts. Kapteyn Mancini Murray Delivered in open court in Luxembourg on 19 November 1998. R. Grass P.J.G. Kapteyn Registrar President of the Sixth Chamber 1: Language of the case: Spanish.