61979C0042
OPINION OF MR ADVOCATE GENERAL CAPOTORTI
DELIVERED ON 15 NOVEMBER 1979 (
1
)
Mr President,
Members of the Court,
1.
The proceedings for a preliminary ruling to which my opinion relates concern the interpretation of Article 4 (3) of Regulation (EEC) No 1308/68 of the Commission of 28 August 1968 on the sale of butter from public storage for exportation and relates in particular to the definition of the concept of force majeure embodied in that article. Clarification was also requested of the scope of principles laid down in the judgment of the Court of 11 May 1977 in Joined Cases 99 and 100/76 concerning the extent of the obligations and liability of persons acquiring butter at a reduced price from national intervention agencies.
I shall provide a brief summary of the facts.
In the period from 21 July to 14 October 1970 the German undertaking Milch-, Fett- und Eier-Kontor (hereinalter referred to as ‘Eier-Kontor’) bought from the German intervention agency (the Bundesanstalt für Landwirtschaftliche Marktordnung, hereinatter referred to as ‘the Bundesanstalt’) some 168 tonnes of butter in a number of consignments at the particularly advantageous price prescribed by the said regulation. The butter had to be exponed within 30 days of sale. Eier-Kontor paid to the intervention agency the prescribed deposit as a guarantee that it would actually export the butter within the specified time. Shortly after purchasing the butter Eier-Kontor resold it all to Butter-Import-Norden GmbH (hereinafter referred to as ‘Norden’) which has its registered office in the free port in Hamburg. However the butter in question was never exported: it was in fact misappropriated by Mr Ehlers, Norden's duly authorized agent [Prokurist] and resold by him on the domestic German market (these facts are established by the judgment of 3 April 1974 of the Landgericht [District Court] Hamburg which sentenced Ehlers to a number of years' imprisonment for misappropriation with aggravating circumstances). In view of the foregoing circumstances the intervention agency, which had previously reimbursed the security to Eier-Kontor, requested the latter to repay it and decided that it should be forfeit pursuant to Article 4 (3) of the said regulation which states ‘save in cases of force majeure the security shall be forfeit if the butter is not exported within the period prescribed in Article 3’.
This gave rise to an action between Eier-Kontor and the intervention agency which is now pending before the Verwaltungsgericht [Administrative Court] Frankfurt am Main. The Verwaltungsgericht, by an order of 22 February 1979, referred the following questions to the Court of Justice for a preliminary ruling:
‘1.
Does a case of force majeure within the meaning of Article 4 (3) of Regulation No 1308/68 of the Commission of 28 August 1968 and the relevant case-law of the Court of Justice also arise if a duly authorized agent acting without permission and to the detriment of the exporting undertaking makes the exports impossible through criminal offences and, if the answer to this question is in the affirmative, is the knowlegde of the persons acting for and responsible for the actions of the plaintiff (directors and shareholders) of the previous convictions of that duly authorized agent at the time of his appointment as such or afterwards relevant as regards the duty to take care?
2.
Must the principles laid down in the judgment of the Court of Justice of 11 May 1977 in Joined Cases 99 and 100/76 also be applied, in addition to their application to Regulation No 1259/72 which is the basis of that case, to the regulation mentioned in (1) above in such a way that the plaintiff must be liable for a wrongful act on the part of the undertaking with which it has entered into an agreement?’
2.
I concur in the view expressed by all the parties to the present proceedings that it is appropriate and reasonable to reverse the order of the questions submitted to the Court of Justice. In fact Question (2) is intended to establish if the first purchaser of the butter from the intervention agency is liable for failure to fulfil the conditions for the use of the butter even when the butter has been delivered to a third party whose fault caused the breach of the said conditions. It appears to me clear that that point should be considered first since, if the answer to that is no, it will be unnecessary to reply to Question (1) concerning the defence of force majeure; the first purchaser can rely on that defence only if it is held that he was in principle responsible for the acts of the subsequent purchaser.
3.
We have seen that the national court formulated Question (2) on the basis of the judgment of the Court of Justice of 11 May 1977 in Joined Cases 99 and 100/76 ([1977] 1 ECR 861) on the interpretation of Article 18 of Regulation No 1259/72 concerning release of the deposit paid to the national intervention agency immediately after the butter is taken over at a reduced price by the successful tenderer (cf. Article 13 of the said regulation). In that case too the successful tenderer for intervention butter transferred the butter to a third party without himself using the butter in accordance with the regulation; the Court of Justice held that, save in exceptional circumstances, ‘the successful tenderer cannot escape his obligations by relying on the undertaking entered into by the purchaser under the terms of the contract of sale’ (paragraph 7 of the decision). The Court arrived at that view not only on the basis of the wording of Regulation No 1259/72, Article 10 (5) of which provided that ‘rights and obligations arising out of the invitation to tender shall not be transferable’ but also in consideration of the scope and purpose of the provision. The Court pointed out in that connexion that the system established by Regulation No 1259/72 was a special measure intended to dispose of surplus butter to the food industry on particularly favourable conditions; it was therefore necessary to take appropriate precautions to ensure that the butter sold on those conditions did not reach the normal market but was in fact processed within a period allowing the regularity of the operation to be checked; on that basis the Court concluded that ‘the effectiveness of the system of checking would be seriously compromised if the acceptance of an obligation to process by a subsequent purchaser who was not himself under any legal obligation to the competent authority were regarded as sufficiently discharging an undertaking entered into by the successful tenderer against a deposit’. Thus, according to the view upheld in that judgment, the duty imposed on the successful tenderer for the butter by Article 18 of the said Regulation No 1259/72 (to ensure the fulfilment of the conditions laid down concerning the processing) continues to have effect even where the successful tenderer does not himself produce the processed products but transfers the butter, in an unprocessed or only partially processed state, to a third party.
I consider that the principle laid down in the judgment of 11 May 1977 on the interpretation of Regulation No 1259/72 also applies to Regulation No 1308/68: the two regulations in fact pursue aims which are closely connected and the detailed rules for their application are very similar.
When Regulation No 1308/68 was adopted considerable public stocks were held in the Community as a result of intervention on the market in fresh butter and it was therefore necessary, in order to take advantage of the possibilities of disposing of it on the world market, to enact measures to promote the exportation of such stocks (cf. the first recital in the preamble to Regulation No 1308/68). With these objectives in view the Commission required the national intervention agencies to sell the butter at a relatively low price on condition that the purchasers undertook to export it to markets outside the Community; at the same time, in order to ensure that the butter was in fact exported, the Commission laid down a short period (30 days) within which it had to be exponed (Article 3) and required the purchaser to provide a deposit as security for the fulfilment of the obligation entered into (cf. Article 4 and the fourth recital of the preamble). It was a condition of the release of the security that the butter should actually have been exported.
Regulation No 1259/72 is also based on the finding that large stocks of butter are held in the Community as a result of intervention on the market (first recital in the preamble) and, like Regulation No 1308/68, it contains proposals to promote the disposal of such stocks by sale at a reduced price (second and third recitals in the preamble); the sole difference is that provision is made for making such sales to processors — and no longer to exporters — so that the requirement imposed on purchasers becomes that of processing the butter awarded into concentrated butter with the incorporation of additives (Article 6). Furthermore under the later regulation too a ‘processing’ deposit must be provided as security (Article 9 (2) and Article 12) which is released only when the successful tenderer has furnished proof that the condition has been met (Article 18 (2)).
It is clear that if these arrangements to prevent frauds had left a loop-hole whereby it would have been possible in certain cases to recover the deposit without in the meantime ensuring that the butter was in fact used in accordance with the requirements of the Community rules these arrangements could not have attained the objectives for which they were established. A malfunctioning of this nature would occur if the transfer of products to a third party who takes over the obligation to export (under Regulation No 1308/68) or the obligation to process (under Regulation No 1259/72) were held to constitute sufficient grounds for releasing the security. It is thus essential that, even in the case of sale to third parties, the security should be released to the first purchaser only on condition that the butter acquired from the intervention agency has in fact been used in the prescribed manner. Such was the ratio decidendi of the judgment of the Court of 12 May 1977 and I consider that it is fully applicable to the present case.
It is true that Regulation No 1308/68, unlike the later Regulation No 1259/72, contains no provision expressly laying down that obligations arising out of the tender shall not be transferable (cf. the said Article 10 (5) of Regulation No 1259/72). This is however understandable because, having prescribed a very short period within which the exports had to be effected (merely 30 days), the authors of Regulation No 1308/68 probably considered it superfluous to make provision for cases of intervening assignment before exportation. Regard must also be had for the fact that Regulation No 1308/68 was adopted shortly after Regulation No 804/68 of the Council on the common organization of the market in milk and milk products and was affected by the fact that at the time of its adoption the matter had not yet been adequately worked out. It is scarcely necessary to add that the absence of any provision for sales to third parties before exportation cannot be understood as a prohibition of such transactions: there is indeed nothing to support such an interpretation.
That point of view is confirmed by the general principles common to the legal systems of the Member States in the field of obligations. In accordance with, those principles a contractual obligation cannot be assigned without the consent of the obligee, that is in the present action, without the consent of the intervention agency. This means that there is a prohibition on the assignment to subsequent purchasers of the goods of the obligations undertaken by the successful tenderer to the intervention agency even though it is not expressly laid down: in other words the successful tenderer remains liable to the agency even though he has sold the goods. Further support for this view is derived from the fact that the obligation to export which is entered into by the purchaser in the document whereby he takes over the goods pursuant to Article 3 of Regulation No 1308/68, although only a part of individual contracts, undoubtedly displays characteristics of public law both because it is prescribed in a regulation which allows of no derogation and because it regards relations between private operators and agencies engaged in functions of general interest.
Another observation may also be made concerning the general principles governing obligations. As the Court is aware any obligor — subject to contrary agreement and unless the obligations in question are of a strictly personal nature — may employ representatives to fulfil contractual obligations. If the obligation to export the butter undertaken by the first purchaser is viewed in this light it may indeed be held that the subsequent purchaser assumes the status of representative of the former in fulfilling that obligation. On that basis the problem of the liability of the first purchaser for non-fulfilment of the obligation caused by the subsequent purchaser presents no difficulties. It must in fact be held that the same rules apply to the behaviour of the representative of the obligor (in the present action Norden) as to that of the principal obligor who is directly involved in fulfilling his own contractual obligations; this is not however because the export obligation has passed to the subsequent purchaser but rather by virtue of the capacity assumed by the latter of representative of the first purchaser.
4.
Let us now consider the question concerning the concept of force majeure. As we have seen the point to be established is whether there is a case of force majeure, for the purposes of Article 4 (3) of Regulation No 1308/68 and of the case-law of the Court of Justice, where the legal representative of an undertaking, by his criminal conduct, renders impossible the fulfilment of an obligation by the undertaking he represents.
In this connexion it must be emphasized that in the present case Norden, the subsequent purchaser of the butter for export has, in relation to Eier-Kontor, the first purchaser of the butter from the intervention agency, the status of a representative for the fulfilment of an obligation in the sense that that fulfilment or non-fulfilment of that obligation by Norde must be considered as fulfilment or non-fulfilment for which Eier-Kontor is liable. Accordingly the conduct of a legal representative of Norden (Mr Ehlers) was capable in principle of rendering Eier-Kontor liable to the market organization just as though the conduct had been that of a representative of Eier-Kontor.
In general terms the point to be settled amounts to establishing whether and within what limits the defence of force majeure applies where the failure to fulfil an obligation is caused by the criminal conduct of a person (manifestly on his own initiative) employed by the obligor in order to fulfil the obligation.
There is no doubt that the problem in question must be appraised in this case in terms of Community law for Regulation No 1308/68 makes provision for both the obligation to export the butter acquired from the intervention agency (and the consequences of any failure to fulfil that obligation) and the defence of force majeure.
The concept of force majeure as it has been developed in the case-law of the Court of Justice with reference to the agricultural regulations requires first of all an objective element, that is the occurrence of an extraordinary event over which the obligor has no influence, and secondly a subjective element, that the obligor should have done everything possible, acting with care, prudence and diligence, to avoid the occurrence of the harmful event and thus of the objective impossibility of fulfilling the obligation. In other words the concept of force majeure, according to the case-law of the Court, is not restricted to absolute impossibility but must be understood as entailing abnormal circumstances unrelated to the obligor, the consequences of which were unavoidable the best of wills notwithstanding. This incidence of the subjective aspect of the concept of force majeure has been upheld in numerous judgments and now constitutes settled case-law: I recall the judgments of 11 July 1968 in Case 4/68 Schwarzwaldmilch v Einfuhr- und Vorratsstelle für Fette ([1968] ECR 377), of 17 December 1970 in Case 11/70 Internationale Handelsgesellschaft v Einfuhr- und Vorratsstelle für Getreide und Futtermittel ([1970] ECR 1125), of 30 January 1974 in Case 158/73 Kampffmeyer v Einfuhr- und Vorratsstelle für Getreide und Futtermittel ([1974] ECR 101), of 15 May 1974 in Case 186/73 Norddeutsches Vieh- und Fleischkontor v Einfuhr- und Vorratsstelle für Schlachtvieh ([1974] ECR 533) and of 20 February 1975 in Case 64/74 Reich v Hauptzollamt Landau ([1975] ECR 261).
The case in question must however be considered within the context of the principles governing the liability of a contractor for the acts of his own agents and in this context it is clear that a criminal or negligent act of an agent always renders the contractor liable for failure to fulfil his obligation as a result of that act. I recall in this connexion Article 1228 of the Italian Codice Civile [Civil Code] which states: ‘If the obligor employs third parties in fulfilling his obligation he is also liable for the fraudulent or negligent acts of such parties’; Article 278 of the Bürgerliches Gesetzbuch [Civil Code] of the Federal Republic which states: ‘A debtor is responsible for the fault of his legal representative and of persons whom he employs in performing his obligation, to the same extent as for his own fault;’ Article 1384 of the French Code Civile [Civil Code] according to which employers and principals are liable for the loss occasioned by their employees and agents in the performance of their duties and; Article 1403 of the Burgerlijk Wetboek [Civil Code] of the Netherlands which states: ‘Principals and employers are liable for the loss occasioned by agents and employees in the course of the duties for which they were engaged’. Although all of these said national provisions relate to noncontractual liability they nevertheless express a general principle applicable to civil liability; it should further be added that not all the legal systems draw a clear distinction between contractual and noncontractual liability. The provisions to which I have referred show that there exists a principle common to the legal systems of the Member States to the effect that a contractor is always liable to third parties for the acts of his representatives.
It follows from this that the plea of force majeure can never be founded on a wrongful act of a representative since, if such an act leads to the non-fulfilment of an obligation owed by a contractor to a third party the contractor is always liable and it is unnecessary to consider whether, by the exercise of the care and diligence of a prudent man of affairs, he could have prevented that act and the consequent impossibility of performance. It is accordingly irrelevant in the present case whether the directors of Eier-Kontor or of Norden were aware of the criminal record of the duly authorized agent of the latter undertaking. It is clear that, for the conduct of the representative to render the contractor liable, it must occur in connexion with the duties which the contractor himself entrusted to the representative, as he did in the present case.
The provision establishing in stringent terms the liability of a contractor for the acts of his representatives is justified by the need to ensure that commercial relations follow their proper course. This is quite apart from the fact that, if the contractor, by relying on a wrongful act or negligence on the part of his representative, were able to avoid liability for failure to fulfil an obligation the result would be that, in substance, from the point of view of the economic effects, the debt would be assigned without the consent of the creditor contrary to the general principle prohibiting such assignment (a principle to which I have already had occasion to refer above).
Confirmation of the solution referred to is to be found in Regulation No 1308/68. It is clear that if the view were taken that wrongful acu or negligence on the part of a subsequent purchaser relieved a contractor of liability for failure to fulfil his obligations where he had exercised all due prudence and care to avoid such a position a would leave a considerable gap in the operation of the arrangements set up by that regulation. A series of transfers of the product to other traders would progressively diminish the duty of the first purchaser to supervise the actual exportation of the butter. himself and thus render nugatory the guarantee constituted by provision of a security.
5.
In conclusion I am of the opinion that the Court of Justice should give the following reply to the questions referred to it by the Verwaltungsgericht Frankfurt am Main by order of 22 February 1979:
The principles set out in the judgment of the Court of Justice of 11 May 1977 in Joined Cases 99 and 100/76 with regard to Regulation No 1259/72 of the Commission also apply to the interpretation of Regulation No 1308/68 of the Commission to the extent that the first purchaser of a product sold at a reduced price by an intervention agency must be held liable for the failure of the person to whom he assigned the product in question to fulfil the obligation to effect the export.
The defence of force majeure within the meaning of Article 4 (3) of Regulation No 1308/68 of the Commission and of the relevant case-law of the Court of Justice cannot be relied upon when a legal representative, through criminal acts performed on his own initiative and contrary to the interests of the undertaking he represents, renders it impossible to fulfil the duty to effect the export prescribed by the said regulation for the purchaser of butter held by an intervention agency.
(
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)	Translated from the Italian.