61980C0256(01)
OPINION OF MR ADVOCATE GENERAL
VERLOREN VAN THEMAAT
DELIVERED ON 10 JULY 1984 (
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Mr President,
Members of the Court,
1. The facts
For a full statement of the many facts relevant to these joined cases, reference may, as in previous cases, be made to the Report for the Hearing. The content of that report, for which provision is made in the Statute of the Court of Justice of the EEC (fourth paragraph of Article 18), influences quite considerably the length of the Advocate General's Opinion; in view of the Report for the Hearing that has been drawn up in the present instance I can confine myself to a brief summary of the principal facts.
Some 8% of the Community's cereal output is used for industrial purposes, in particular for the production of the basic product, starch. In order to ensure that starch production remains competitive, above all vis-à-vis synthetic substitutes, the Community cereal market rules make provision for the grant of production refunds in respect of starch. The same arrangement must therefore also apply in respect of “quellmehl” (which is prepared from maize and wheat for use in the baking industiy) and “gritz” (maize meal and broken rice used in the brewing industry), products which compete with starch. When the common organization of the market in cereals came into force the production refunds were applied in accordance with the principle of equality. With the passage of time, however, the cost to the Community increased considerably. Consequently the Council considered that the production refunds granted in respect of gritz and quellmehl should be abolished outright as part of a series of amendments to the said market organization. That was effected by means of Council Regulations Nos 665/75 (maize gritz, as from 1.8.1975) and 668/75 (broken rice as from 1.9.1975) (Official Journal 1975, L 72, pp. 14 and 18 respectively). Those measures gave rise to a number of actions by undertakings affected by the abolition of the production refunds in question. As a result, the Court declared the abolition to be invalid because it infringed the principle of equality. The Court's decision concerning quellmehl was in Joined Cases 117/76 and 16/77 ([1977] ECR 1753) and its decisions concerning gritz were in Case 117/76 (loc.cit.) and Joined Cases 124/76 and 20/77 ([19771 ECR 1795).
Following those judgments, production refunds for maize, gritz and broken rice were reinstated by Council Regulations Nos 1125/78, 1126/78 and 1127/78 of 22 May 1978 (Official Journal L 142, 1978).
The regulations took effect retroactively from 19 October 1977, the date of the judgments in Joined Cases 117/76 and 16/77 and in Joined Cases 124/76 and 20/77. Accordingly no refund was granted for the intervening period (1 August or, in the case of broken rice, 1 September 1975 to 19 October 1977). In the judgments of 4 October 1979 in Case 238/78 ([1979] ECR 2955), in Joined Cases 241, 242 and 245 to 250/78 ([1979] ECR 3017) in Joined Cases 261 and 262/78 ([1979] ECR 3045) and in Joined Cases 64 and 113/76, 167 and 239/78 and 27, 28 and 45/79 ([1979] ECR 3091), the Court held that the Community was liable for the damage ensuing from the failure to grant refunds in respect of that intervening period.
The present proceedings concern a number of Italian undertakings which claim to have used maize gritz and/or broken rice for the manufacture of beer during the intervening period. In accordance with the judgments of 19 October 1977 and 4 October 1979 the undertakings asked the Community to pay the refunds due in respect of that period.
However, the Commission refused to accede to their requests on the basis of Article 43 of the Statute of the Court of Justice, relating to the limitation of actions. Thereupon the undertakings concerned brought actions under the second paragraph of Article 215 of the EEC Treaty. In its interlocutory judgments of 27 January 1982 in Joined Cases 256, 257, 265 and 267/80 and 5/81 ([1982] ECR 85) and in Case 51/81 ([1982] ECR 117), the Court dismissed the objections of inadmissibility raised by the Community.
Consequently, the Court is now asked to pronounce on the substance of the above cases and, in addition, Case 282/82. Thus, all in all the consequences of the Council's abrupt discontinuation of the refunds in 1975 have extended over almost 10 years.
2. The admissibility of the applications
Having regard to the period of limitation laid down in Article 43 of the Statute of the Court of Justice, the periods covered by the applications for damages made by six of the undertakings are as follows :
(a)
Case 256/80: 18 August 1975 to 18 October 1977 inclusive;
(b)
Case 257/80: 24 November 1975 to 18 October 1977 inclusive;
(c)
Case 265/80: 28 November 1975 to 18 October 1977 inclusive;
(d)
Case 267/80: 8 August 1977 to 18 October 1977 inclusive;
(e)
Case 5/81: 12 February 1976 to 18 October 1977 inclusive;
(f)
Case 51/81: 9 March 1976 to 18 October 1977 inclusive.
For a more extensive treatment of the calculation of the above periods I would refer, once again, to the Report for the Hearing.
With regard to the application in Case 282/82, which was not lodged until 23 June 1982 and hence was not covered by the Court's judgment of 27 January 1982, there is still some dispute. The applicant, Birra Peroni, contends that the period of limitation did not begin to run until 30 May 1978, the date on which Regulations Nos 1125/78 and 1127/78 were published (Official Journal L 142, 1978). In my opinion, that contention cannot be accepted. The period of limitation laid down in Article 43 of the Statute of the Court of Justice relates to the events associated with the abolition of the refunds by Regulations Nos 665/75 and 668/75 and not to the measures taken subsequently thereto with the aim of making good the damage that the Court found to have been caused thereby. That follows clearly from, in particular, paragraph 10 of the Court's interlocutory judgments of 27 January 1982, in which, as has already been mentioned, the arguments put forward by the Commission and the Council in support of their objections of inadmissibility were rejected. In accordance with the contention of the Commission and the Council, the period in Case 282/82 must be determined as 23 June 1977 to 18 October 1977 inclusive.
3. The substance of the applications
By their applications the seven Italian undertakings seek an order that the Community should pay compensation for the damage suffered as a result of the abolition of the production refunds by Regulations Nos 665/75 and 668/75, the damages to be determined in accordance with the calculation criteria supplied by the applicants or such criteria as the Court may deem to be necessary. In addition, they ask that the Community be ordered to pay the interest due and the costs. The Council, on the other hand, asks the Court to instruct the applicants to demonstrate that actual damage was suffered and that there was a causal connection between the damage and the unlawful acts of the Council; should the applicants fail to do so, it asks the Court to dismiss the applications and order the applicants to pay the costs. In the alternative, should the applications be held to be well founded, either wholly or in part, the Council asks that the damages be reduced by the amounts which were passed on to a subsequent marketing stage and, further, that the amounts be calculated in Italien lira by applying the representative (green) rate in force at the time when the refunds should have been paid. The Commission simply asks that the applications be dismissed, essentially on the ground that the losses suffered as a result of the abolition of the refunds were passed on to customers in the form of price increases.
The above claims must be considered in the light of the judgments of 4 October 1979, in which the Court held that the Community was liable under the second paragraph of Article 215 of the Treaty for the damage suffered as a result of the abolition of the refunds. Furthermore, in those judgments the Court stated that the damages should be calculated on the basis of the amount of the unpaid refunds (equivalent to the production refunds applicable to maize starch). At the same time, the Court held that, where the loss had been passed on in the form of an increase in the prices charged to customers, that fact should be taken into account when assessing the quantum of the damage. However, in those cases that does not appear to have occurred and the damages were in fact calculated on the basis of the refunds applicable to maize starch. The same occurred in the judgment of 18 May 1983 in Case 256/81, Pauls Agriculture Ltd v Council and Commission, [1983] ECR 1707.
4. The passing-on of the loss and the burden of proof
On a general level the Court recognizes that under Community law the extent of pecuniary claims made by parties against national or Community authorities in respect of national or Community charges which have been unduly levied or national or Community subsidies which have not been paid is determined, inter alia, by the extent to which the resultant loss was passed on to subsequent marketing stages. That principle was reiterated in general terms in paragraph 13 of the Court's judgment in Case 199/82, Amministrazione delle Finanzen San Giorgio SpA, [1983] ECR 3595. As the present cases also show, the implementation of that principle hinges to a substantial extent on the incidence of the burden of proof. In view of the fact that the Court has held that the damage is to be calculated on the basis of the amount of the refunds that were not granted, there are, in my view, three arguments which may be adduced in favour of the proposition that the Community institutions should bear the burden of proving that the loss was passed on.
First, there is an economic argument. As I stated at the beginning of this Opinion, the production refunds in question were introduced in order to make it possible for maize gritz and broken rice to find a competitive use. The economic rationale for production refunds is that if they were not granted the products concerned would be unprofitable. It may therefore be assumed that the loss arising from the abolition of the refunds was in principle not incorporated in the selling price, since otherwise the products would have lost their competitiveness. That economic argument therefore creates a legal presumption in favour of the applicants that according to the normal principles of the market economy the loss was not passed on. Consequently, it is logical that the Council should be required to rebut that presumption.
Secondly, it should be borne in mind that there is an economic but not a legal connection between the amounts of the refunds and the selling prices that were actually charged. Entitlement to refunds does not depend on the prices that were actually charged but solely on the use of broken rice for the manufacture of beer and the production of maize gritz. It follows that the basis for calculating the amount of the loss sustained should be the amount of the refunds. The starting point must therefore be that the loss is equal to the refunds that were abolished, unless it can be proved that the loss was passed on. It follows that it is for the Council to prove the extent to which the loss was passed on.
Thirdly, it follows from paragraph 14 of the Court's judgment in the San Giorgio case (cited above) that the incidence of the burden of proof where repayment is claimed of sums levied contrary to Community law may not be such as to make it impossible in practice to secure repayment. The Court pointed out that that would be so, in particular, where the person concerned had the burden of establishing that the charges had not been passed on to other persons at a subsequent marketing stage. That principle also applies mutatis mutandis where, contrary to Community law, subsidies have not been paid. In my view, the San Giorgio judgment thus provides further support for the view that it rests with the Council to prove that the loss was passed on.
5. Compensation for the damage
Subject therefore to the Council discharging its burden of proving that the loss resulting from the abolition of the production refunds was passed on, the amount of damages claimed by the applicants can be determined as being the equivalent of the refunds which would have been paid for the periods listed in section 2 above in respect of the use of maize for starch production had such refunds been granted. Naturally, the actual determination of the sums due to each individual undertaking will be subject to verification of the relevant documentary evidence by the responsible authorities. In accordance with the Court's judgment in Case 256/81 and with the requests made by the applicants in the course of the oral procedure, the Court should give an interlocutory judgment which leaves the parties to determine the damages payable, but reserves to the Court the power to decide the matter in the event of the parties' failing to reachagreement. During the oral procedure the Court was critical of the inertia already shown by the Community institutions with regard to carrying out such verification. In view of that, I consider six months to be an appropriate time-limit.
In Cases 256/80 and 282/82 there is the further problem that the applicants are not producers of maize gritz or broken rice but brewers of beer who are exercising the rights to compensation that were assigned to them by their suppliers, who had sustained the loss. For further details I would refer once again to the Report for the Hearing.
In so far as the factual circumstances surrounding the assignment are not completely clear, in particular as regards the assignemt of the applicant's rights in Cases 267/80 and 5/81 to Birra Peroni, the matter can be clarified in the course of the verification of the documentary evidence by the responsible authorities. The same applies to the objection raised by the Commission that the assignment, which took place pursuant to or as a result of an Italian government circular, was not fully in conformity with that circular. In view of the fact that the Community institutions do not claim that the assignment, in question was unlawful and hence could not be relied on in proceedings against them, I consider that there is no reason to carry out an inquiiy of the type required by the Court's judgment in Case 250/78 ([1983] ECR 421).
The Council and the Commission further contended that the assignees can avail themselves of their right to compensation only in so far as they establish that they did not in fact pass on to their customers the losses caused by the abolition of the refunds. I consider that contention to be untenable in the light of my observations concerning the incidence of the burden of proof. Furthermore, it conflicts with the veiy nature of the refunds, which are linked to the product and not necessarily to the producer.
6. Interest and conversion rates
The requests concerning interest and conversion rates can be dealt with briefly. Both matters have been settled in the Court's interlocutory judgment in Case 256/81, in paragraphs 14 and 17 respectively, where the Court awarded interest in respect of an identical application at a rate of 6% from the date of the judgment and, in line with the Court's judgment in Joined Cases 64/76 and Others ([1982] ECR 1733), fixed the conversion rate at the rate prevailing at the date of the judgment establishing the obligation to make good the damage.
7. Conclusions
My conclusions my be summarized as follows:
1.
The EEC should be ordered to pay to the claimants amounts equivalent to the production refunds for maize gritz and broken rice intended for use in the brewing industry which the applicants would have received if, between the various dates indicated in section 2 above from which their applications are admissible and 19 October 1977, the use of the said products had conferred an entitlement to the same refunds as those laid down for the use of maize for the manufacture of starch.
2.
The said amounts should, where appropriate, be reduced by sums passed on to undertakings at subsequent marketing stages in the form of higher prices. The burden of proof in that respect falls on the Community.
3.
Interest should be paid on the said amounts at the rate of 6% as from the date of the judgment; that date shall also be the relevant date for the conversion of the amounts into national currency.
4.
The parties should be required to inform the Court within six months of the delivery of the judgment of the amounts of compensation arrived at by agreement.
5.
In the event of failure to reach agreement, the parties should be requested to forward their respective calculations to the Court within the same period.
6.
The decision as to costs should be reserved.
(
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