61975C0047
OPINION OF MR ADVOCATE-GENERAL TRABUCCHI
DELIVERED ON 26 FEBRUARY 1976 (
1
)
Mr President,
Members of the Court,
1.
By decision of 20 March 1975, the Commission rejected applications from the Government of the Federal Republic of Germany the purpose of which was to cause the European Agricultural Guidance and Guarantee Fund (‘the EAGGD’) to be debited with the transportation costs incurred through the determination of leases for the storage of cereals from 1 January 1971 to 31 December 1974. The applications were based on the provision in Article 4 (1) (g) of Regulation No 787/69 of the Council on the financing of intervention expenditure in respect of the domestic market in cereals and in rice (OJ L 105, English Special Edition 1966-1972, p. 14). Under this provision, the guarantee section of the EAGGF is to be debited with ‘the total amount of the costs incurred through transportation made necessary after the taking over of goods by the intervention agency and carried out under conditions concerning, in particular, the need for transportation, to be determined according to the procedure provided for in Article 26 of Regulation No 120/67/EEC or Article 26 of Regulation No 359/67/EEC; this amount shall include the costs of placing in and removing from store arising from such transportation, calculated as provided for under (c)’.
After consulting the Management Committee for Cereals, the Commission came to the conclusion that transfers of cereals resulting from the determination of leases constituted routine administrative acts on the part of the German intervention agencies, because of their widespread practice of using private warehouses and of the provision normally made in the relevant leases for the right to determine them by notice; and that, therefore, the costs thereby incurred were covered by the standard amount provided for in Article 4 (1) (e) of the aforementioned regulation. This provides that the EAGGF shall be debited with ‘the total amount of the costs incurred through storage, calculated on the basis of a standard amount per unit of weight/period of storage determined in accordance with Article 5 (2)’.
According to the Commission, the transportation costs provided for under Article 4 (1) (g) are concerned solely with transportation operations made necessary by developments arising out of a changing market situation and which are, accordingly, closely connected with the common management of the market in cereals and, as such, incapable of enabling the consequent need for the goods to be moved to be treated as a routine administrative act. And, precisely because they are of this nature, subparagraph (g) provides a suitable means of control, especially in determining the need for transportation.
Since the Commission's rejection of the applications for reimbursement submitted by the German administrative authorities is principally based on considerations concerned with the intrinsic character of the development which gave rise to the costs in question, as a result of which this development is excluded from the ambit of the provision in subparagraph (g), the contested decision is logically only able to contend as an alternative also that, to enable advantage to be taken of subparagraph (g), applications made thereunder must be submitted before transportation takes place. On this point the Commission contends that, to enable a satisfactory appraisal to be made of the need for transportation, the check must be carried out before the transfer operations are embarked upon. This preliminary control alone makes it possible for any decision to be taken fixing the conditions on which the transport must, if authorized, be effected.
The contested decision is in sharp contrast with the Decision of 14 May 1971 in which the Commission had, on the other hand, held:
(a)
that, under the provision in Article 4 (1) (g) of Regulation No 787/69 of the Council, the transportation costs incurred through determination of a warehouse lease were to be debited to the EAGGF;
(b)
that, for this purpose, it was not necessary to make an application prior to transportation.
In accordance with this decision and with guidance given to it at the same time by an official of the Commission, the Federal Government of Germany then and also subsequently, periodically arranged, when transportation had been completed, to inform the responsible departments of the Commission of the transportation costs resulting from the said determinations of leases.
During the present proceedings, the agent of the Commission stated that the decision of 14 May 1971 was a unique precedent of its kind and that it was explained by the fact that at the time the Commission was not aware that the determination of warehouse leases was not an unusual occurrence in Germany. When, in the light of subsequent experience, the Commission realized that developments of this kind were a normal feature of German storage arrangements under the intervention system, the Commission did not confirm its previous decision and, after careful consideration, formally defined its attitude on this point in its Decision of 20 March 1975.
2.
The Government of the Federal Republic of Germany seeks annulment of the decision for
(a)
infringement of Article 4 (1) (g) of Regulation No 787/69 of the Council;
(b)
infringement of the principle of legitimate expectation, because the previous practice of the Commission had led the Federal Government to believe that it was not necessary to apply for payment of the transportation costs involved before transportation was effected.
In support of the first submission, the applicant states that the provision relied upon makes the debiting of transport costs conditional solely upon the need for the operation. In this connexion, I must first of all point out that the costs incurred for transportation to the warehouse after purchase of the cereals by the intervention agency are, like the costs to be met for transport from the warehouse for the purpose, or at the time, of sale of the cereals in store, covered by the provision in Article 4 (1) (c), which lays down the basis on which the appropriate standard amount is calculated. These costs are at present borne by the EAGGF and, as the operations involved are quite normal and manifestly necessary, no particular form of verification has been prescribed.
Transport costs coming under subparagraph (g) are a different matter. The fact that a suitable provision has been laid down referring to a special procedure for verifying the costs incurred through transport operations which take place after receipt of the cereals by the intervention agency, in cases where the goods are taken out of the store not for the purpose of sale but merely for fresh storage in another depot, appears to support the Commission's contention that those cases involve costs for operations which the Community legislature regarded as abnormal. If this were not so, they could have been covered by the general provision under subparagraph (c), especially since subparagraph (g) refers to it for the bases of calculation. The only difference, therefore, between the debiting of costs in these two provisions is the specific verification of the ‘need for transportation’ to which, under subparagraph (g), Community responsibility for costs is subject. This justifies the conclusion that the Community legislature wished to recognize the special character of these latter costs and to make their reimbursement dependent upon the fulfilment of certain conditions.
It is true that the reference in Article 4 (g) to the Management Committee procedure for the determination of the conditions relative to transportation, particularly the need for it, includes the Commission's power, under the said procedure, to lay down general rules on the subject. But the very fact that provision has been made for the possible adoption of special rules governing the application of the provision in question confirms what I said earlier concerning the abnormal character of these particular transport costs.
Notwithstanding the special character, referred to above, which, apparently, the authors of the regulation in question intended to attribute to the costs covered by Article 4 (1) (g), when the Commission acts on the basis of the special so-called ‘Management Committees’ procedure, it undoubtedly enjoys a wide margin of discretion in deciding, whether generally or in individual cases, which transportation operations may benefit from the said provision.
It is, accordingly, impossible for us a priori to declare that, in an implementing regulation for Article 4 (1) (g), the Commission has no power to lay down the conditions under which the costs necessary for transfers of cereals owing to the determination of warehouse leases may be debited to the EAGGF.
But, so long as the Commission has not imposed its own limitations on the way in which it exercices its discretionary power, the Court cannot criticize the substance of a decision adopted by the Commission in conjunction with the competent Management Committee, except in cases where the Commission may have exceeded the limits within which the legislature has endowed it with discretion; in other words, in so far as the contested decision clearly conflicts with the provisions of the regulation in question.
The view which the Commission put forward in the present case, and on which the contested decision is based, is that the events connected with the placing in storage of goods, even though arising from unforeseen developments such as fire, explosion or flooding, are covered by the general powers in subparagraph (e) which, because of its very comprehensive character, provides for these and other costs to be covered by fixing a standard amount. In consequence, therefore, the contested decision also rejected the applications submitted by the Federal Republic of Germany for reimbursement of transport costs in connexion with storage changes due to accidents such as fire, flooding etc. It may be noted that this part of the decision has not been challenged by the German Government, which thus, by implication, accepts the Commission 's contention in law on this point.
It should be borne in mind that ‘the total amount of the costs incurred through storage’ referred to in the aforesaid subparagraph (e) is a concept of sufficient breadth generally speaking to extend to costs incurred through transfers of the goods stored, and these costs can arise in the normal context of the contractual relationship established by the national intervention body with the warehouse owners. In such cases, therefore, nothing would prevent transportation costs from being treated as being, in their nature, part of the general storage costs.
Since this view does not conflict with any rule of law we can readily accept that the Commission should follow it in. practice, while restricting the scope of the definition of ‘need’ for transportation the costs of which are calculated differently, on the basis of Article 4 (g). It is true that, on a purely literal interpretation, the wording of the provision in subparagraph (g) does not appear to stand in the way of its application to this type of transport as well, but the special character which the legislature deliberately conferred on the assumption by the intervention agency of the costs provided for by this provision makes it possible, indeed desirable, to apply it with care.
On this basis it is possible to accept the view adopted by the Commission that transport rendered necessary by one of the accidental or unforeseen events referred to above and a fortiori transport made necessary by a more easily foreseeable event, such as a determination of a warehouse lease in accordance with an express provision of the contract, should not normally result in the application of subparagraph (g) and that, specifically for this reason, such cases are treated as included in the residual concept of costs incurred through storage calculated on the basis of a standard amount within the meaning of the provision of the above-quoted subparagraph (e).
3.
The provision in subparagraph (g), with its reference to the conditions concerning the need for transportation, might also be interpreted as meaning that it has no application when the said transportation is unavoidable since this is one of the contingencies attracting the standard reimbursement of costs provided for under Article 4 (1) (e). Consequently, subparagraph (g) cannot be regarded as covering contingencies of the kind to which I referred earlier, whether they are accidents such as fire, explosion etc., or connected with voluntary acts, such as withdrawal from a lease on the part of the warehouse owner but all of them being directly related to the conditions in which the goods are placed in storage, including the unavoidable need for them to be moved. This consideration might confirm the Commission's contention that the need for transportation referred to under the provision in subparagraph (g) is essentially related to the situation of the market in the products concerned and to an appreciation of the intrinsic requirements of the common management of the market
However that may be, for the purposes of the present case it is not necessary to establish whether the attitude adopted by the Commission necessarily follows from the interpretation of that provision in view of the fact that, even if the interpretation of the law did not require the exclusion of subparagraph (g), it could nevertheless be justified as the application of a standard of assessment recognized as being within the powers of the Commission since it is not inconsistent with the scope of the authority which the regulation in question has conferred upon it.
The Commission reached the negative conclusion expressed in the contested decision on reimbursement of the transportation costs concerned because, in its view, this fell in with the general requirements for proper working of the system and, in particular, with sound principles of economic management. It was indeed on account of such practical considerations and not because it was compelled to do so by a clear piece of legislation that, after reconsidering its original attitude, the Commission decided to place on Article 4 of the regulation concerned the interpretation which it considered to be consonant with those requirements. This leads to the conclusion that, even if the Commission had acted on the basis of having a freedom of choice within the framework of the provisions in force, it would in any case have reached a decision along the same lines. The considerations of expediency which it used to justify the contested decision would serve, therefore, to justify it even if Article 4 (1) (g) were not, interpreted in the abstract, such as necessarily to preclude the possibility of a decision in favour of the claims of the Federal Republic.
4.
From this standpoint, which is deliberately based on considerations of expediency and efficiency in the application of the system, the decision adopted by the Commission seems quite proper and logical. For the purposes of applying the provision in subparagraph (g), the decision refuses, as a matter of principle, to take into account transport which has become necessary merely because of the determination of a lease. On the other hand, it reserves the right to assess in each case the need for transfer of the goods from one warehouse to another when the common management of the market in the product is involved. An example of this would occur if it were a case of meeting a threatened shortage which had arisen in another area subject to the same intervention agency, or in order to organize a more rational arrangement of the products in the warehouses if, for instance, a fresh and substantial supply of the product was expected to come on the market and it was, accordingly, essential for the national intervention agencies to have properly organized and equipped warehouses for the reception of the new surplus; see to this effect the Commission Decision of 23 July 1969 (JO L 204, p. 10). In such cases, there is without doubt a close connexion between the transportation and the market situation in the product concerned and there is justification for subjective appraisal of the need for transport in the light of the requirements of sound management of that particular market. It seems reasonable to accept that, especially in respect of situations of this kind, there is every justification for using the control procedure for which provision is made in subparagraph (g).
We are, of course, dealing with a conclusion which, although put into effect by means of a Decision, has practical consequences which extend far beyond this individual case in that the Commission has thus, even for future cases, committed itself not to allow transportation costs to be taken into consideration for the purposes of comprehensive reimbursement in a particular case. This mode of proceeding without recourse to an implementing regulation does not seem open to challenge since the contested measure is, in fact, designed to settle an individual case. Moreover, the adoption procedure for each type of measure is identical in both cases. In the absence of a set of rules governing the control procedure provided for in Article 4 (1) (g), the control must be effected case by case. The mandatory intervention of the Management Committee, which would scarcely be justified if it were merely a question of allowing for costs incurred as a result of wholly unavoidable transport operations, can perform a useful function precisely in determining the connexion between the transport operation the costs of which the EAGGF is being asked to bear and the management of the common agricultural market, and in making the assessment which, in such circumstances, becomes necessary, of the most economic administration of the EAGGF's activities compared with the general need for proper functioning of the market in the product concerned.
5.
As regards the question whether the transport costs involved are effectively covered under Article 4 (1) (e) all that need be said is that it can be settled on the basis of the definition of the standard amount.
The absence up to the present in this calculation of any specific item covering the kind of transport costs with which we are concerned may, apart from its insignificance as compared with the standard amount, be explained by the fact that it arises from a peculiarity which is intimately connected with the storage system operated by the German intervention agencies and that the only country apparently involved is Germany, which did not consider it advisable to ensure that this item of costs should be included in the aforesaid calculation under the impression that they were covered by the provision in subparagraph (g).
It follows from all these considerations that there is no basis for the main submission made by the applicant for annulment of the refusal to apply Article 4 (1) (g) of the abovementioned regulation in its favour in respect of transportation necessitated by the determination of leases.
6.
In its reply the applicant submits a new argument. It suggests, in the alternative, that even supposing that subparagraph (g) were to be interpreted in accordance with the concept expressed by the Commission, ‘the increase in the number of leases determined’ during the period covered by the applications for reimbursement is due to the export policy of the Community and that, even when viewed from the Commission's standpoint, the provision in subparagraph (g) therefore authorizes reimbursement of the costs incurred through the said operations. In fact, Community encouragement of cereal exports was responsible for virtually emptying a large number of warehouses; because of this, their owners found it expedient to determine the contracts with the intervention agencies in order to stock them with other goods.
Unfortunately, this submission was not made in the course of the administrative procedure in support of the applications lodged by the German Government, with the result that neither the Commission nor the Management Committee was called upon to deal with it when adopting the contested decision.
In the present proceedings, the German Government's new submission was, as stated, an alternative one made for the first time in its reply, which, in view of Article 42 (2) of the Rules of Procedure of this Court, suggests doubts about its admissibility.
In my view, however, without its being necessary to consider the possibility of inadmissibility on the grounds of want of form, the Court could not find any substance in this submission in the absence of evidence confirming the alleged causal relationship between Community policy and the leases determined.
It certainly cannot be claimed (nor does the applicant, in any case, go so far as to claim) that the contested decision is illegal solely because it did not take this point into account of its own motion independently of the existence or otherwise of the alleged causal relationship.
An applicant who relies on a new submission has to prove it. But, in the present case, the applicant did no more than supply comprehensive statistics of the quantities of cereals sold each year from 1968 to 1974 by the German intervention agencies and the number of leases determined, in order to demonstrate that the increase in the quantities sold corresponded to an increase in the number of leases determined.
Apart from the significant fact that the variation in sales and the variation in the number of determinations do not tally with each other, it is noteworthy that the comprehensive and summary nature of the figures supplied by the applicant makes it impossible to determine whether and to what extent the Community's export policy was in fact responsible for determination of the leases involved. If in the year (1969) when the German intervention agencies sold almost two million tonnes, 17 leases were terminated, to what extent if at all is the increase in determinations to 42 (or roughly 250 %) due to the increase in sales by 200000 tonnes (or little more than 10 %), recorded in 1970?
And to look at the course of events, which is of greater interest here, in the following years, what causal relationship can be established between the 42 determinations and the 2135000 tonnes in 1970, the 37 determinations and the 878000 tonnes in 1971, the 44 determinations and the 1182000 tonnes in 1972, the 37 determinations and the 1171000 tonnes in 1973, and the 18 determinations and the 885000 tonnes in 1974?
Determination of leases is known to be a feature of the sector concerned at the present time and to occur even when sales by the intervention agencies are particularly low: in 1968 there were 12 determinations compared with only 199000 tonnes sold.
Even if it were possible to identify a statistical tendency in the increase in determinations running parallel with the increase in sales (but as has been seen in a disproportionate and somewhat uneven manner) it could not, in any case, possibly be accepted that all the determinations which took place in the period of an increase in sales were actually caused by the increase. Although the applicant itself asked the Commission for reimbursement of the transportation costs incurred through all the determinations which occurred in the period in question, in its reply the only connexion it draws with the export policy of the Community is ‘the increase in the number of leases determined’.
Since subparagraph (g) does not make provision for a comprehensive standard repayment but for payment of the entire costs of each individual transportation, it would be necessary to establish which determinations and which transportations, taken individually, are in fact to be attributed to action by the Community.
The information supplied by the applicant does not make it possible for this to be established.
For this reason, apart from the question whether it was put forward too late, this alternative submission for annulment, based on Article 4 (1) (g) of Regulation No 787/69, must be dismissed as without foundation.
As the submissions for annulment based on that provision have been found to be without substance, it is not necessary to go into the arguments adopted by the applicant in support of the submission for annulment, based on the same provision, and also deployed in respect of that part of the contested decision, which I have recognized as being of merely secondary importance, namely the requirement that the request for application of the provision in subparagraph (g) shall be made before transportation is embarked upon so that if necessary the existence of the need in question may be checked beforehand.
7.
Consideration must now be given to the argument based on failure to respect the legitimate expectation of the applicant arising from the fact that, in the contested decision, the Commission departed from its own previous practice.
There is no doubt that the Commission, by its Decision of 14 May 1971 that the EAGGF should be debited with transportation costs of the same kind as those involved in the present case, might have imbued the administrative authorities concerned with the belief that the same thing would happen in future. But, even if based on the behaviour of the other party, a hope which does not materialize does not suffice to create entitlement to compensation.
There is no need to deal with a case in which a prior decision conflicts with the law and where the administrative authorities are obliged, if not to revoke the decision, at least to adopt different decisions in the future so as to conform with the law in force. But it must be borne in mind first that, when exercising a discretion, an administrative authority is always at liberty to adopt a different view from those previously taken on particular issues. The adoption at a particular time of one of the possible alternatives does not deprive the authority of the power to take a different view in future.
In saying this, I am not trying to deny the importance of respect for the principle of legitimate expectation the legal effect of which in the Community legal order the Court has had occasion to recognize in its previous decisions. What must be borne in mind here is that the principle assumes its essential importance in determining the existence, if any, of the blame which is the foundation of the liability of public authorities for compensation for damage suffered by an interested party because of an unforeseeable shift of attitude by the administration concerning the settlement of a given problem. Thus, even if it were perfectly justified in terms of administrative convenience and it kept within the limit of the discretion which the Commission must be recognized as having, a sudden change of attitude by the Commission on responsibility for the transportation costs which are the subject of the present case could, quite apart from annulment or a declaration by way of a preliminary ruling that the measure which embodies it is invalid, create liability on the part of the Community if the national administrative authorities had incurred expenditure which it would presumably have avoided if the Commission's own actions had not induced it to believe that such expenditure would be borne by the Community.
On the other hand it is doubtful whether the disappointment of mere expectations is capable, in itself, of resulting in an annulment or in a declaration that a measure is invalid.
Especially when a measure of general application is involved, the disappointment of legitimate expectations is not inherent in the measure itself but arises from failure to adopt appropriate transitional measures. This would therefore involve a defect which was extrinsic to the legislative substance of the measure and as such ought not to be capable of constituting justification for its annulment or declaration as invalid.
I am, moreover, conscious of the serious consequences, as regards legal certainty, which any other conclusion might have on the legislative measures of the Community, bearing in mind that their validity may at any time be reviewed under Article 177. I am also conscious of the disproportion between the interests of a person seeking protection against a regulation the need for which, and the extent to which, it meets the general requirements of the Community, are in principle accepted and the damage which the means employed for that purpose might do to the working of the Common Market, whereas those who have been disappointed in their legitimate expectations may find in Article 215 of the Treaty a more suitable remedy for the protection of their interests.
Without doubt, these considerations have very much less weight in the case of individual decisions. Nevertheless the principle, laid down by the case-law of this Court, limiting compensation exclusively to the losses suffered as the result of failure to act in accordance with expectations, might be difficult to apply in an action for annulment, with the consequence that the protection of expectations would, even in financial terms, produce different results according to the type of legal redress chosen by the party concerned.
A further consideration is that if departure from mere expectations were recognized as a possible ground for annulment of an individual measure, it would, in view of the fact that the Treaty provides exactly the same method for the annulment of individual and general measures, be logical to recognize that the same possibilities are available as regards the validity of regulations.
In the present case the applicant has invoked disregard of his legitimate expectations to support an action for annulment and not an application for damages based on Article 215 of the EEC Treaty. Whether, even in this connexion, it is decided to entertain the action for annulment as such or whether the decision is, instead, to treat it as an application for damages, I do not believe that, for the applicant, the final outcome in the present case should be different. The latter has never claimed that the system of stock-piling cereals practised in Germany would have been different if the aforementioned Commission Decision of 14 May 1971 had excluded reimbursement of transportation costs caused by determination of a lease. There is indeed every reason for believing the opposite.
It has in fact been stated by the German Government itself that the system of private storage normally employed by the national intervention agencies in the Federal Republic is a particularly advantageous one; that the amount to be paid for exclusion of the right to give notice would be much higher; and that, moreover, removals from one warehouse to another owing to the operation of the determination clause represent an insignificant fraction of the goods stored under such conditions: on average 12500 tonnes out of about 2500000 per year.
The conclusion may be drawn from this that, even if the Commission had, from the beginning, taken a different attitude with regard to the interpretation and application of Article 4 (1)(g) of Regulation No 787/69, on the lines of the decision contested in this case, this would not have caused the national intervention authority to make any substantial change in its contractual practice on the storage of cereals; there can be therefore no question of a causal relationship existing between the costs incurred by the applicant national authority on account of the warehousing changes concerned and the previous practice of the Commission.
In terms of the action for damages, this leads to the conclusion that there is wanting at least one of the essential conditions for recognition of the liability of the Community in respect of any infringement by the Commission of the principle of the legitimate expectation of those subject to its administration. In terms of the action for annulment, it must be recognized that the departure from the applicant's expectations is not in this case sufficiently serious to justify annulment of the contested measure.
For these reasons, the submission concerning respect for legitimate expectations must also be dismissed.
I conclude with the advice that the Court should dismiss the application as unfounded and order the applicant to pay the costs of the action.
(
1
)	Translated from the Italian.