61976C0083(01)
OPINION OF MR ADVOCATE GENERAL CAPOTORTI
DELIVERED ON 1 MARCH 1978 (
1
)
Mr President,
Members of the Court,
1.
This opinion refers, as the Court is aware, to five applications lodged against the Council and the Commission under the second paragraph of Article 215 of the EEC Treaty by the undertakings Bayerische HNL, Bernd Adleff, F. X. Zollner, Christof Schwab and Johann Seidl. The applicants are claiming compensation for the damage which they state they have suffered through the effects of Council Regulation No 563/76 of 15 March 1976 on the compulsory purchase of skimmed-milk powder held by intervention agencies for use in feeding-stuffs.
One very important preliminary point must be considered as established, in other words that the above-mentioned regulation is null and void. The Court declared it null and void in the judgments of 5 July 1977 in Case 114/76 Bela-Mühle v Grows-Farm, Case 116/76 Granaria v Hoofdproduktscbap voor Akkerbouwprodukten and Joined Cases 119 and 120/76 Ölmühle Hamburg and Becher v Hauptzollamt Hamburg and Hauptzollamt Bremen-Nord ([1977] ECR 1211 et seq.)
which were referred to the Court for preliminary rulings and discussed jointly with four of the present applications for damages. I do not therefore need to repeat the considerations put forward in my opinion of 7 June 1977 on the subject of the incompatibility of Regulation No 563/76 with superior rules of Community law. It seems to me, rather, to be appropriate to quote the last and most important part of the decision of this Court of 5 July 1977. Paragraph 7 states that:
‘The arrangements made by Regulation (EEC) No 563/76 constituted a temporary measure intended to counteract the consequences of a chronic imbalance in the common organization of the market in milk and milk products. A feature of these arrangements was the imposition not only on producers of milk and milk products but also, and more especially, on producers in other agricultural sectors of a financial burden which took the form, first, of the compulsory purchase of certain quantities of an animal feed product and, secondly, of the fixing of a purchase price for that product at a level three times higher than that of the substances which it replaced. The obligation to purchase at such a disproportionate price constituted a discriminatory distribution of the burden of costs between the various agricultural sectors. Nor, moreover, was such an obligation necessary in order to attain the objective in view, namely the disposal of stocks of skimmed-milk powder. It could not therefore be justified for the purposes of attaining the objectives of the common agricultural policy’.
Following the judgments of 5 July 1977, the written procedure in the present cases entered a new phase. In fact the Court asked the parties to supply it with all appropriate information relating to the causal connexion between the provisions of the regulation declared null and void and the alleged damage and to supply further evidence capable of establishing the effect of Regulation No 563/76 on the prices of fodder. The Court decided by order of 9 January 1978 to join Application 40/77, lodged on 6 April 1977, to the four earlier cases. Finally, the Court specified that the hearing should relate to ‘the effects of the invalidity of Regulation No 563/76 excluding however the estimate of the damage’. The parties complied with that request. Naturally my opinion will remain within the same limits, leaving aside the question of the calculation of the amount of the damages.
2.
Since it is necessary to ascertain the liability of the Community institutions arising from a regulation which has been declared null and void it seems to me that it is appropriate to clarify two points of a preliminary nature. First, the legislative nature of regulations does not in principle prevent the Community from being required to compensate for the damage caused by regulations which are contrary to superior rules of law. Secondly, a breach of specific rules of law which results in a measure's being considered as null and void is not a condition sufficient to establish the liability of the author thereof.
I would observe with regard to the first point that if reference is made to the domestic legal systems of the Member States it is easy to ascertain that there are many differences between them with regard to the liability of the State (or smaller territorial units) for unlawful legislative measures. A legislative measure par excellence is a law but it is impossible in all the systems to appraise whether the law is compatible with a superior rule; for example, this is impossible under the English constitutional system. Even in the legal systems in which there exists a clear hierarchy between constitutional rules and legislative provisions (those of Italy and Germany in particular) the question whether compensation is payable for damage arising from an unconstitutional law is anything but settled. However, it is impossible to deny that in every State certain measures adopted by the public administration, such as administrative regulations or certain governmental or ministerial orders are legislative in nature, in other words have binding effect as against all persons. In this respect the principle that such measures must, like all administrative measures, observe the limits laid down by superior rules, including statutory provisions, is generally accepted and it may also be considered as generally accepted that the State is liable for the damage caused by unlawful regulations or orders (even if on conditions which vary from one legal system to another).
In the light of the foregoing statement it seems necessary to decide whether Community regulations must be treated as statutes or as general administrative measures for the purposes of establishing from what branch of the national legal systems those ‘general principles common to the laws of the Member States’ laid down by Article 215 of the EEC Treaty as the basis of non-contractual liability must be deduced. There are specific arguments in favour of each of the two solutions.
If account is taken of the function of the regulations adopted by the Council within the Community legal system by filling the ‘framework’ represented by the Treaty with a new content, and if above all the basic regulations and those involving side choices of economic policy are considered, it seems certain that such measures resemble national statutes far more than administrative regulations. Naturally, since all Community regulations are subject to a review of their legality by the Court of Justice and therefore to a test as to whether they are or are not compatible with the superior rules of law laid down by the Treaty, the analogy with national statutes may more easily be made in relation to those national legal systems in which legislation is subject to review as to constitutionality by institutions of a judicial nature. Even within these limits however the analogy is far from perfect in view of the structural differences existing between the national legal systems and the Community legal system and in particular of the fact that Community regulations are not adopted by a parliamentary institution as however in the case of national legislation. For this reason too the need in the Community system for a judicial review of the legality of such measures has made itself felt more strongly than in the case of national laws. On the other hand, the system of applications for annulment laid down by Article 173 of the EEC Treaty shows strong similarities with the appeals permitted against administrative measures by some national legal systems.
The opinion delivered on 13 July 1971 by Mr Advocate General Roemer in the Zuckerfabrik Schöppenstedt case ([1971] ECR 989) contains considerations on this point which are of interest. He observed that the question of the admissibility of applications for damages arising from legislative measures is answered in the affirmative in France and in Belgium and that in Italy and in Germany such an application is not excluded. However, in addition to the principles common to the laws of the Member States he emphasized that it is appropriate to take into account ‘the particular objectives of the Treaty and the peculiarities of the Community structure’ and mentioned in this respect the lack of parliamentary control, the principle that provisions relating to the protection of the rights of individuals should not be interpreted restrictively and the power of private individuals to challenge Community regulations. Finally, the reference made by Mr Advocate General Roemer to Article 34 of the ECSC Treaty, which provides that the High Authority must ensure redress for the harm resulting from a decision of the High Authority when the Court has annulled the measure and declared that the Community is liable even if ‘general decisions’ are involved, in other words regulations, is of particular interest.
It is not however necessary to analyse this more deeply. In fact I consider that it has become superfluous to arrive at a conclusion on the theoretical problem mentioned because this Court has already repeatedly stated that the Community may be called upon to pay compensation for the damage resulting from unlawful regulations. It does not follow from these decisions whether the view taken by the Court was based on the principles common to the Member States with regard to the liability of the public authorities for regulations or whether it was based upon the wider reasoning of Mr Advocate General Roemer. In my opinion, in view of the extreme difficulty of making the hierarchy of the Community legislative measures coincide with that of the national legislative measures, it is logical that the more rigorous solution concerning the liability of the public authorities should be adopted with regard to the Council of the European Communities, which has the twofold capacity of legislature and administration without having the democratic mandate and the power to express the sovereignty of the people which may justify exempting the legislature from the general rules on liability.
The judgments of this Court to which I refer are those delivered on 2 December 1971 in Case 5/71 Aktien-Zuckerfabrik Schöppenstedt v Council of the European Communities [1971] ECR 975, on 13 June 1972 in Joined Cases 9 and 11/71 Compagnie d'Approvisionnement de Transport et de Credit SA. and Grands Moulins de Paris S.A. v Commission of the European Communities [1972] ECR 391, on 24 October 1973 in Case 43/72 Merkur-Außenhandels-GmbH v Commission of the European Communities [1973] ECR 1055, on 2 July 1974 in Case 153/73 Holtz & Willemsen GmbH v Council and Commission of the European Communities [1974] ECR 675, on 14 May 1975 in Case 74/74 Comptoir National Technique Agricole (CNTA) SA. v Commission of the European Communities [1975] ECR 533 and on 31 March 1977 in Joined Cases 54 to 60/76 Compagnie Industrielle Agricole du Comté de Loheac and Others v Council and Commission of the European Communities [1977] ECR 645.
The principle stated in all these decisions — with slight variations of phraseology but substantially the same content — was that expressed in the judgment of 2 December 1971: ‘In the present case the non-contractual liability of the Community presupposes at the very least the unlawful nature of the act alleged to be the cause of the damage. Where legislative action involving measures of economic policy is concerned, the Community does not incur non-contractual liability for damage suffered by individuals as a consequence of that action, by virtue of the provisions contained in Article 215, second paragraph, of the Treaty, unless a sufficiently flagrant violation of a superior rule of law for the protection of the individual has occurred’.
In my opinion those decisions correctly resolve the question of principle with which I have dealt so far: the Community may be required to pay compensation for the damage caused by unlawful legislative measures. The above-mentioned judgments speak precisely of a legislative measure ‘involving measures of economic policy’: there is no doubt that Regulation No 563/76 was such a measure since the expression used by the Court refers in substance to the measures which are the result of the exercise of a discretion in the regulation of an economic sector. At the same time, the decisions in question also confirm the second preliminary point which I was concerned to clarify: in other words the fact that the grounds for invalidity and the requirements for liability do not coincide. The passage quoted from the judgment in the Aktien-Zuckerfabrik Schöppenstedt case states precisely that the non-contractual liability of the Community presupposes ‘at the very least’ the unlawful nature of the act alleged to be the cause of the damage; immediately it is added that such liability for damage caused by regulations which involve a measure of economic policy depends on two other conditions: that the rule which has been infringed is ‘a superior rule of law for the protection of the individual’ and that the breach is sufficiently serious or ‘flagrant’ (‘suffisamment caractérisée’; ‘hinreichend qualifiziert’). These therefore are the further factors the existence of which it is necessary to demonstrate in addition to the mere finding of the unlawful nature of a regulation and before dealing with the problems of the nature of the damage, the causal connexion between the wrongful act and the damage and the amount of the damage which must be redressed.
3.
In the present case it is not difficult to establish that the rules which have been infringed, or at least two of them, must in fact be classified as rules of law which are both superior to regulations for the protection of the individual and therefore correspond to individual rights. It follows above all from paragraph 7, quoted above, of the decision in the judgment of 5 July 1977 that the Court held that there had been a breach of the principle of non-discrimination in so far as it described the obligation to purchase laid down by Regulation No 563/76 as a ‘discriminatory distribution of the burden of costs between the various agricultural sectors’. I consider that it is unimportant to establish whether, in reaching that decision, the Court based its judgment on the prohibition against discrimination contained in the second subparagraph of Article 40 (3) of the EEC Treaty or on the more general rule of non-discrimination to which all Community legislation is subject; in both cases the rule which has been infringed is amongst those conferring personal rights on individuals. Secondly, the above-mentioned judgments referred by implication to the principle of proportionality, as shown by the sentence: ‘Nor, moreover was such an obligation [to purchase] necessary in order to attain the objective in view …’. That principle too is without doubt superior to regulations and it too is aimed at the protection of individuals who derive therefrom a corresponding basic personal right; I would refer in this connexion to the considerations widely developed in my opinion of 7 June 1977 (paragraph 6) and to the case-law referred to therein (in particular to the judgment of 17 December 1970 in Case 25/70 Einfuhr- und Vorratsstelle für Getreide und Futtermittel v Köster, Berodt & Co. [1970] ECR 1161).
Finally, the last sentence of the above-mentioned paragraph 7 of the decision in the judgments of 5 July 1977 established that there had been a breach of Article 39 of the EEC Treaty, which lays down the objectives of the common agricultural policy, or more precisely of the second subparagraph of Article 40 (3) of the Treaty, regarding the requirement that the common organizations of the market should be ‘limited to pursuit of the objectives set out in Article 39’. The sentence in question in fact points out that the obligation to purchase laid down by Regulation No 563/76 ‘could not therefore be justified for the purposes of attaining the objectives of the common agricultural policy’. In this respect however there may be doubts as to whether it is a rule of law for the protection of individuals conferring personal rights upon them: the interests of the persons for whom the common agricultural policy is intended are certainly protected by it but not in the form of the grant of personal rights. However, this aspect of the situation examined here does not alter the findings reached concerning the scope, with regard to those subject to the Community legal system, of the two other rules which have been infringed: the principle of non-discrimination and the principle of proportionality. It would have been sufficient that such a regulation was contrary to one of those rules alone for it to be considered unlawful, null and void and in breach of an individual personal right; consequently it is irrelevant that a third rule of law with which Regulation No 563/76 conflicts is a means for the protection of mere interests rather than a source of personal rights.
4.
It is much more difficult to establish whether in the present case a sufficiently serious breach of Community law has occurred. In fact opinions differ widely with regard to the definition of that concept and of the particular characteristic which the breach of a rule must display for the Community to be liable for the damage arising from an unlawful regulation.
According to the view expressed by Mr Advocate General Roemer and Mr Advocate General Reischl, it is necessary to consider a breach which is clear and flagrant as being sufficiently serious (eklatant, qualifiziert) (see the respective opinions in Joined Cases 63 to 69/72 Werhahn v Council [1973] ECR 1262 and Case 153/73 Holtz & Willemsen v Council [1974] ECR 705).
Mr Advocate General Reischl spoke however of a ‘particularly clear breach’ of a principle (that case, like the present, concerned the prohibition against discrimination) and of ‘obvious and serious disregard of its basic nature’ (see [1974] ECR 704), finally stating that the handicap in question was ‘such that there could be said to be a flagrant discrimination’ ([1974] ECR 705).
I am afraid that any attempt to define a serious breach by means of the concept of its ‘clear’ nature constitutes a change in terminology which is insufficient to dissipate doubts. Above all, I would emphasize that both opinions referred to above were essentially concerned with establishing whether or not there had been a breach of the principal of non-discrimination: Mr Advocate General Roemer considered that such was the case and inferred from this that the Community was liable; Mr Advocate General Reischl decided in the negative and refused to accept that the Community could be required to compensate for the alleged damage. However, it was stated in the above-mentioned judgment of 14 May 1975 in the CNTA case, in which it was held that there had been a breach of the principle of the protection of the legitimate expectation of interested parties because appropriate transitional measures had not been included in a regulation of the Commission, that ‘the Commission has violated a superior rule of law, thus rendering the Community liable’ (paragraph 44 of the decision).
It would be tempting to deduce from all this that the concept of serious breach is absorbed by that of the breach of a principle of Community law or simply becomes a superfluous adjunct since it has already been specified that liability presupposes the breach of a superior rule of law which confers personal rights on individuals. I was guided by this point of view, on the lines of the judgment in the CNTA case, in my previous opinion of 7 June 1977. I consider however that such a deduction may well appear hasty and that it is necessary to carry the analysis further in view of the insistence with which the Court has repeated in its decisions that liability for damage arising from legislative measures is to be recognized by the commission of a serious breach and that, owing to the extent of the repercussions of such liability, a large measure of caution is justified. In this connexion it is useful to recall that in the above-mentioned opinion Mr Advocate General Roemer recognized that in the judgment in Case 5/71 measures were taken ‘to limit claims to compensation arising from legislative acts to specific and exceptional circumstances’. I consider that the function which the Court intended to bestow upon the concept of the ‘seriousness’ of the breach was thus defined.
5.
To continue discussing systematically and in general terms, I would say that an unlawful measure may be particularly serious either because of the level or importance of the rule of law which has been infringed, or because of the degree of blame to be attributed to the author of the measure, or because of the extent of the loss suffered. It seems to me to be appropriate to make some remarks on each of these aspects, taking into account the fact that the present case involves an unlawful legislative measure and that such measure has already been recognized as being contrary to Community law.
The first of the above-mentioned aspects seems to me to be the least controversial. It is clear that the fact that a legislative measure is unlawful implies that it is contrary to a superior rule of law and in fact we have already seen how the case-law of the Court requires specifically for the purposes of liability that it must be a rule of law intended for the protection of the individual; this has been reflected in the still more restricted concept of a rule of law conferring personal rights on individuals. This may already serve to exclude liability when a rule relating to the procedure or the form of legislative measures has been infringed; rules of this kind do not in general confer personal rights on individuals even though it is clearly possible for the legislative measure to be declared void on formal or procedural grounds. I would however go further with regard to the question of how important the rule of law must be for a breach of it to be classified as sufficiently serious: that is, I consider that it must be a principle or a rule which is of fundamental importance in the Community legal order. In other words, the question whether the legal breach is serious must, in my opinion, be judged in relation to the system as a whole and must therefore be compared to the importance of the rule of law within the system by reason of its content and function.
The problem of the blameworthy nature of the act is much more complex. As the Court is aware, in this respect the wording of the first paragraph of Article 40 of the ECSC Treaty differs from that of the second paragraph of Article 215 of the EEC Treaty. The case-law of the Court on the latter Treaty not only contains no finding to the effect that blameworthiness is one of the requirements for the non-contractual liability of the Community but, on the contrary, states that: ‘By virtue of the second paragraph of Article 215 and the general principles to which this provision refers, the liability of the Community presupposes the existence of a set of circumstances comprising actual damage, a causal link between the damage claimed and the conduct alleged against the institution, and the illegality of such conduct’ (see the judgments of 28 April 1971 in Case 4/69 Lütticke v Commission [1971] ECR 325 and of 2 July 1974 in Case 153/73 Holtz & Willemsen v Council [1974] ECR 675, the first case concerning an act of individual scope and the second a legislative measure). It is also appropriate to mention once more the judgment of 14 May 1975 in Case 74/74, the CNTA case, the result of which was to declare the Community liable for a legislative act incompatible with the principle of the protection of legitimate expectation, after describing objectively the conduct of the Commission (the immediate abolition of compensatory amounts without the adoption of transitional provisions), but without any appraisal of the subjective element of blame. Finally, therefore, it seems that, since there is no possibility of eliciting any other guidance from the general principles common to the laws of the Member States, Community law accepts, for the purposes of the noncontractual liability of the Community, that the undoubtedly voluntary nature of the acts adopted by the institutions is sufficient and that that nature gives rise to a presumption of blame when an unlawful measure is enacted. This moreover is the solution accepted with regard to unlawful administrative measures in the legal systems of certain Member States, including Italy, the Netherlands, Belgium and Luxembourg (see in this connexion the article entitled ‘Zur Reform des Staatshaftungsrechts’ by the Max-Planck-Institut fur Auslandisches Offentliches Recht und Völkerrecht, 1975, p. 8).
Having stated this, I find it difficult to maintain that, for the purposes of liability for damage arising from Community legislative measures, it is necessary to bring in an additional factor (serious misconduct), which is irrelevant as a general requirement for the liability of Community institutions, for the purpose of classifying the breach of a rule of law. On the other hand, in a case such as the present one, in which the policy of the Community institutions has already been subject to appraisal in order to establish whether the regulation in question is null and void it must be accepted that the ‘unjustifiable’ nature of that conduct has already been established. This is proved by the fact that the Council and Commission, in explaining the reasons which in their opinion justified the adoption of the measure and thus proved the absence of serious misconduct on their part, have relied upon arguments which have already been examined and rejected by the Court in the preliminary rulings given in Case 114, Case 116 and Joined Cases 119 and 120/76: the serious crisis in the milk sector, the urgent need for measures to provide a remedy, the trend in the imports of soya from the United States and so forth. In other words, the problem dealt with when the invalidity of the legislative measure in question was being discussed, whether the Council had remained within the limits of its discretionary power or had exceeded the bounds of that power, has already included the question of the extent to which excuses could be found for the measure adopted: if that measure had been fully justified by the circumstances there would have been no need to annul the regulation and therefore the principal requirement of liability would not have been fulfilled: the unlawful nature of the measure.
It remains to be seen whether the concept of ‘serious breach’ may be linked with the aspect of the seriousness of the damage, in other words of the extent of the loss suffered. An indication to this effect is contained in the above-mentioned opinion of Mr Advocate General Roemer of 18 September 1973 ([1973] ECR 1260) in which he stated that a given measure fixing prices, whilst affecting all the members of a category, had, as far as liability was concerned, begun to assume the appearance of a specific law ‘touching allegedly the very core of their existence’. Further on Mr Advocate General Roemer stated that he considered the fact that the contested provision had for the applicants ‘far-reaching effects threatening their existence’ was sufficient for the purposes of the admissibility of the application. However, Mr Advocate General Reischl opposes this point of view in his above-mentioned opinion of 8 May 1974 and refuses to admit that the seriousness of the effects of the unlawful measure could be adopted as a condition for asserting a claim for damages and emphasized that neither the case-law of the Court nor the reference to the concept of ‘serious breach’ could support such theory.
In some national legal systems there are cases in which the right to compensation depends also upon the seriousness of the damage. Thus, for example, in two decisions of the French Conseil d'Etat (14 January 1938, La Fleurette, Recueil Lebon, p. 25; 22 October 1943, Établissements Lacaussade, ibid, p. 231), compensation for damage arising from legislative measures is subject to its ‘abnormally serious’ nature. The Conseil d'État also delivered judgment to the same effect in the following cases: Caucheteux and Desmonts_21 January 1944; Vannier_27 January 1961; Chauche_10 February 1961; and Bovero_25 January 1963 (see the above-mentioned publication of the Max-Planck-Institut fur Ausländisches Offentliches Recht und Völkerrecht, p. 61 et seq.). It should be observed however that all these decisions refer to compensation for damages arising from lawful provisions; moreover, they also stipulate a second condition, namely the special nature of the damage. However, the terms of the problem were not the same, apart from the impossibility of incorporating in Community law decisions adopted in the legal system of one Member State.
One may wonder whether, from the point of view of the rules of neutral justice, there may be justification for basing the concept of ‘serious breach’ of the superior rule of law on the part of the Community legislature on the criterion of the seriousness of the loss suffered. In my opinion, the considerations for and against are equal.
On the one hand, it is possible to maintain that since what is involved is damage suffered by many individuals within the categories which suffered discrimination, it is possible for a certain measure of sacrifice to be imposed in the general interest as long as it remains within the bounds of what is commercially tolerable. It would be possible to consider as such a loss which does not go beyond the scope of the average, statistically detectable fluctuations in the market prices of given goods where, as in the present case, the loss suffered consists in an increase in
prices caused by the provision which has been declared void. More broadly, it is also possible to state that a commercial loss which does not appreciably interrupt or alter the working rhythm of an undertaking appears to be bearable.
The application of such criteria would presuppose, however, reference to an abstract model of an average undertaking. In reality, what is bearable for a large-scale undertaking may not be so for another which has a lower capacity for resistance but in spite of that it is impossible to consider estimating the seriousness of the loss in relation to each of the persons putting forward a claim for damages since the problem in this case is to define a requirement for liability for a measure of general application.
On the other hand the fan that an unlawful measure, in conflict with a fundamental rule of law contained in the legal system and with the individual rights therein guaranteed, should give rise to compensation in order to restore, in the collective interest, the balance destroyed by the unlawful measure runs contrary to the acceptance of the criterion of the seriousness of the loss suffered, regardless of the extent of the damage. This is still more obvious when the unlawful measure consists in a breach of the prohibition against discrimination and of the principle of proportionality. It is not without significance that the condition regarding the seriousness of the loss has been postulated in French case-law with regard only to compensation for damage arising from lawful legislative measures.
Finally, any acceptance in the judgment of this Court of the criterion of which I have spoken so far would constitute a development by interpretation of the concept of ‘serious breach’ which would certainly not be incompatible with the logic of the system of liability for legislative measures but could not be deduced from the principles common to the laws of the Member States. If a common tendency emerges from these legal systems at least with regard to liability for unlawful acts (including legislative measures) adopted by the public authorities that tendency is along the lines of not making compensation dependent on the extent of the damage.
6.
We have seen that the question last examined is linked to another in the case-law of the French Conseil d'État, namely that of the special nature of the damage (‘prejudice special au requérant’ (damage special to the applicant)). That case-law contains a second condition for compensating a person who has suffered damage through a lawful legislative measure (including a regulation).
Analogously, the theory of special sacrifice (Sonderopfer) has been developed in German law and frequent reference has been made to it during the course of these proceedings; it seems that the theory originated with regard to expropriation because the intention was to identify the material aspect of this lawful coercive measure alongside the formal aspect of its individual nature.
Transposed to the level of Community law, and more specifically to that of the problem with which we are dealing, that of liability for damage arising from unlawful regulations, these considerations prompt the following question: Must the liability of the Community be limited to cases in which there are specifically determined persons or categories of persons and therefore be excluded in cases in which the legislative measure affects broad categories of persons? I should like to point out immediately that, in my opinion, it is appropriate to discuss this problem not by adopting one or other trend contained in national law — all the more since liability for unlawful measures and damages for lawful measures are two profoundly different things — but rather by taking into account an indication from Community law contained in the above-mentioned Article 34 of the ECSC Treaty which limits the High Authority's duty to provide redress for harm resulting from unlawful decisions — which may include general decisions — to cases in which ‘direct and special harm is suffered by an undertaking or group of undertakings’.
However, it is necessary to clarify the limits within which the problem arises. On the one hand, it is clear that the Community cannot be required to be answerable for damage caused by an unlawful legislative measure to all persons subject to Community law: apart from the absurdity of the argument, such a measure could not in any case be annulled as being in conflict with the prohibition of discrimination! On the other hand, it would not be permissible to introduce a requirement of ‘individual damage’ so as to make the liability of the Community for an unlawful legislative measure subject in the last resort to the condition that the person who has suffered the damage was affected directly and individually. In fact, the result of that would be to transfer to the sphere of actions for damages a requirement characteristic of applications for annulment; that would ill accord with the clear distinction between the two legal remedies stated in the case-law of this Court (see the observations correctly made along those lines by Fuss, ‘Zur Rechtsprechung des Europaischen Gerichtshofes Uber die Gemeinschaftshaftung für rechtswidrige Verordnungen’, in the Festschrift für Friedrich August Freiherr von der Heydte, I, p. 179).
The gist of the problem in the present case is therefore whether those persons belonging to a category which is widely defined — the cattle, pig and poultry breeders on whom the burdens laid down in Regulation No 563/76 were imposed — may assert a claim for damages even though they are certainly more numerous than a ‘group of undertakings’. It would be possible to consider that although the discriminatory treatment of the above-mentioned category of traders led to the regulation's being declared null and void, the fact that the category which suffered discrimination is too wide however prevents the damage suffered from being recognized as sufficiently individual in character for the purposes of founding liability. Requirements of the public interest might preclude compensation for damages affecting wide categories of persons, with a view in addition to preventing the Community from being burdened with a massive amount of damages.
These considerations of expediency are not however supported by arguments based on positive law (with the exception of the above-mentioned Article 34 of the ECSC Treaty which seems to me however to be difficult to regard as the expression of a general principle, especially since the system of Community liability has been re-cast in the EEC Treaty). Even under German law, there is no requirement in the case of liability for an unlawful legislative measure that the damage should be particularly individual in character; the Bundesgerichtshof has ruled that it is sufficient to find that the loss sustained was unlawful in order to hold that a ‘special sacrifice’ has been established (see Kimminich, Bonner Kommentar, Article 14 of the Grundgesetz, paragraph 241). In my view this is based on a rationale which may also be extended to Community law: if it is accepted that the Community must be liable for damage caused by a measure of general application which has been declared null and void on the basis of a principle which is equally general, how may the class of persons entitled to compensation be restricted otherwise than by means of the principle which has been breached and the damage directly suffered? We should not forget that Community liability in the field under discussion here is subject to the breach of a superior rule of law creating personal rights: it is therefore logical for the person whose right has been infringed to be the person entitled to claim for damages regardless of the number of other persons whose rights have similarly been infringed (though always within the category protected by the superior rule of law). It seems to me moreover that the Court reasoned thus in the above-mentioned CNTA case, when it held that the Community was liable for having adopted a regulation which was incompatible with the principle of the protection of legitimate expectation and adversely affected all exporters of colza and rape seed and oils derived therefrom.
7.
It seems to me to be appropriate at this point to summarize briefly the conclusions which I have reached as regards the problem of the distinguishing features of a ‘serious’ breach in relation to the present case:
(a)
It is certainly necessary to take into account, for the purposes of liability for damage caused by regulations, the importance of the rule of law which has been infringed; it must be a rule of conduct of fundamental importance in the Community system. This is so in the present case.
(b)
‘Serious misconduct’ is not necessary, as the element of blameworthy conduct is implied in the system of liability for acts of the institutions of the EEC, and in particular with regard to measures of a legislative nature. This makes it superfluous to examine whether or not excuses could be found for the options pursued by the Community authorities when they adopted Regulation No 563/76. In any event the decision that their conduct was not excusable was already taken when the Court held that the Council had exceeded the limits of its discretion and declared inter alia (in the judgments of 5 July 1977) that the measure adopted was not necessary in order to attain the objective in view.
(c)
According to the principles common to the laws of the Member States, the liability of the public authorities for unlawful measures does not presuppose that the damage is of a given extent. If the Court were to hold, by elaborating the concept of a serious breach by a ‘progressive’ interpretation, that the seriousness is linked to the extent of the damage, it would be appropriate to lay down a general formula defining the limits of tolerable damage;
(d)
With regard to damage arising from the incompatibility of Community legislative measures with superior rules of law conferring rights on individuals, it is necessary to accept in principle that any person whose rights have been infringed is entided to compensation even if he belongs to a wide category of persons. All that is necessary is to be able to identify those persons who are entitled, which seems to be possible in this case precisely because Regulation No 563/76 affected only specific categories of traders.
8.
At the beginning of the second written stage of these proceedings, the Court requested the parties to indicate, with regard to the harmful effects of Regulation No 563/76, ‘whether the applicants could have countered those effects in their relationship with their suppliers by preventing the latter from passing on to the price of the feeding-stuffs the effects of the system established by the regulation’. The intention was to ascertain in this way whether or not the damage could have been avoided if the applicants had acted differendy.
In reply to the question put by the Court, the applicants stated that they were not in a position to oppose the increases in the prices both because of the impossibility of building up large stocks, as the feeding-stuffs would deteriorate and because the productivity of the animals would be reduced owing to a change in feeding-stuffs consequent upon the change in supplier, since the composition of feeding-stuffs varies from one manufacturer to another. The possibility of obtaining supplies from suppliers in more distant regions was ruled out by the high costs of transport.
The Council has maintained that it would have been possible for the purchasers of feeding-stuffs to oppose the increases in the prices; it claims that this is shown by the fact that one undertaking refused to accept such increases (the reference for a preliminary ruling in Case 114/76 arose from this very fact). It seems however that in this particular case the breeder was able to take advantage of special clauses in the contract with its supplier which enabled it to raise objections to an increase based on a contested provision. It does not follow that the same possibility also existed for the present applicants.
On the other hand, the Commission has acknowledged that the suppliers of animal feeding-stuffs are in a very strong position on the market and that therefore the opportunities for small and medium-sized breeders to raise objections to the increases in price were very slight. In spite of this, according to the Commission the individual breeders could have tried to resist by acting through their trade associations or forming themselves into a group. However, the Commission itself finally admits that the question is not of decisive importance for the solution of the present cases.
It seems to me that it is impossible to speak of conduct on the part of the applicants which contributed to causing the damage. In fact, the reasons which they have put forward for their conduct are convincing; I would add that at the date on which the applicants began to face the increases in price Regulation No 563/76 had not yet been declared null and void and that doubts as to the validity of a provision, although justifying legal proceedings, do not oblige those concerned to contest every action on the part of other persons arising from the application of that provision.
9.
The considerations which have been set out so far lead me to consider that the Community is liable for the damage caused by the application of Regulation No 563/76. The questions relating to the nature of the damage and the causal connexion between the unlawful measure and the damage remain to be dealt with, leaving aside for now, as I stated at the outset, the question of the amount of compensation.
The applicants complain in substance that as a result of the abovementioned regulation there was an increase in the price of animal feedingstuffs; as purchasers of such products, they were obliged to pay that higher price, thereby suffering damage corresponding to the extent of the increase.
It is therefore necessary to establish:
(a)
in principle whether compensation must be paid for damage complained of not by the principal persons to whom Regulation No 563/76 was addressed — the producers and importers of animal feeding-stuffs — but by the purchasers of such feeding-stuffs;
(b)
what effect Regulation No 563/76 had on the increases in the prices of feeding-stuffs and whether or not it was the sole factor with regard to such increases;
(c)
whether the applicants were able in their turn to pass on to their customers the burden of the increased prices;
(d)
whether an inquiry into the repercussions of the abovementioned regulation on the costs of production and on the profit margins of the applicant undertakings might be relevant.
With regard to (a), I do not consider that it is possible to accept the argument put forward by the defendant institutions denying the existence of a sufficient causal connexion between the regulation and the damage of which the applicants complain on the ground that the many stages between cause and effect prevented the causal connexion from being direct in character. The fact that the provisions of the regulation were addressed directly to the manufacturers and importers of feeding-stuffs and thus to persons other than those who finally bore the economic effects thereof is not sufficient in order to deny that the regulation is the cause (or at least one of the causes) of the increased price of feeding-stuffs. On the other hand, it must be recalled that under Article 5 of the regulation in question, the successive buyers of the products referred to in Articles 2 and 3 (in particular colza, rape and sunflower seeds, linseed and soya beans or protein products processed therefrom) were to bear the burden of the costs arising thereunder in the case of all contracts concluded before the entry into force of the regulation. The purchasers of feeding-stuffs were therefore not even formally speaking ‘third parties’ with regard to the system introduced by the regulation.
With regard to (b), the two defendant institutions maintain that the increases which occurred in the price of feeding-stuffs in the spring of 1976 were not entirely justified by the effect of the obligation to incorporate milk powder.
According to the Commission, such increases are in good part attributable to other causes which have nothing to do with Regulation No 563/76. Referring to the fact that between March and July 1976 the increase in the price of soya beans was almost four times that of the increase in price which may be considered to have been caused by the use of skimmed-milk powder when the Council regulation started to apply, the Commission asks which proportion of the increase in the price of animal feeding-stuffs was really due to the obligation to purchase powdered milk and which to the increase in the world price of soya beans. Moreover, according to the statements of the Commission, the producers of animal feeding-stuffs sought to lessen the impact of the double increase in costs by having recourse to substitute domestic products containing protein with regard to which no obligation to purchase powdered milk was laid down.
The applicant undertakings have produced numerous letters sent to them by their respective suppliers immediately after the entry into force of Regulation No 563/76 to inform them that the system laid down by that regulation obliged them to increase the prices of feeding-stuffs. The initial increase, which was 5 % at the maximum, was generally reduced subsequendy by about a quarter. That reduction, as explained to the Court during the hearing, was attributable to the fact that the producers of feeding-stuffs at first passed on in their prices the greater burden which resulted from the loss of the security provided for in Articles 2 and 3 of the above-mentioned regulation, whilst they later merely passed on to their customers the lesser increase resulting from the incorporation of milk powder in the feeding-stuffs. That also explains why the fall in the prices of feeding-stuffs which occurred after the expiry of the system established by the abovementioned Council regulation was less than the initial increases.
The defendants have replied that it is not sufficient to produce the statements made by the suppliers and that the applicants must indicate how the increase in the prices was calculated in detail taking into account the varying composition of the feeding-stuffs according to the various types of breeding.
Finally, the defendant institutions do not deny the existence of a connexion between the Council regulation and the increase in the prices of feeding-stuffs. They do however deny that the whole amount of the increases referred to by the applicants is attributable to that regulation. With regard to this particular point therefore the argument is not whether prices went up but by how much.
This does not alter the fact that the question is very important for the purpose of ascertaining to what degree a causal connexion exists between the unlawful measure and the damage and to what extent the damage is attributable to the application of the regulation. I should say that the applicants are correct when they account for the inadequacy of the evidence which they put forward by pointing out the difficulty of establishing how producers of feeding-stuffs make their calculations and the precise composition of their products. They request that those who were responsible in the various undertakings producing feeding-stuffs for calculating the effects of the obligation to purchase powdered milk should be called as witnesses and specify their names, status and addresses.
In fact, only the manufacturers are in a position to specify how they have calculated the effects of Regulation No 563/76 on their costs, taking into account the different factors involved in the composition of the feeding-stuffs, their quantitative relationship and the increases in the prices of soya beans in the period in question. It is superfluous to add that the replies may vary according to the producers and to the types of feeding-stuffs. All this should, in my opinion, be clarified by means of a preparatory inquiry and an expert's report.
With regard to (c), it would however not be sufficient to prove the extent of the effects of the compulsory purchase of powdered milk on the price of feeding-stuffs for the purpose of ascertaining the amount of the right to compensation if it appeared that the applicants were able in their turn to pass on the higher cost of the feeding-stuffs in the prices charged to their customers. However this question has also been the subject of a wide dispute between the parties.
The applicants maintain that once the existence of damage as a result of the increase in prices caused by the regulation has been proved it is not for them to show that it was impossible to pass on that damage to their clients but for the defendants to prove the contrary. In their opinion, any such possibility is linked to market conditions since the price of the product, apart from its costs, is the effect of the laws of demand and supply.
However, the applicants have produced a report drawn up by the experts Hülsemeyer and Graser and, relying upon that report, they stress that although the number of undertakings in the poultry-breeding sector and their relative sizes may give the impression of an oligopolistic market structure, nevertheless the great homogeneity of production and the free access of competing traders from the other Member States to the domestic German market in practice prevent the undertakings in that sector from being able to conduct themselves like undertakings in an oligopolistic market. Apart from that consideration, the applicants consider that the Hulsemeyer-Graser report has shown, on the basis of a precise study of the effects of the increase in the prices of animal feeding-stuffs on the prices of chicks of laying strains and of pullets, that the variations in the prices of the feeding-stuffs do not have an appreciable effect on the eggs which have reached maturity. If therefore the supply of chicks of laying strains did not react to the change in the price of animal feeding-stuffs, it is necessary to conclude, on the basis of the laws of supply and demand, that the prices of these products could not have been changed either. Finally, in the market situation which is characteristic of the products in question it was impossible for the breeders in question to pass on to their buyers the increases in costs caused by the Council regulation, at least during the period in which the regulation was in force.
The Commission criticizes various aspects of the abovementioned expert's report but does not contest the validity of the data on which it is based and of some important economic assessments. More particularly, in so far as poultry breeders are concerned the Commission considers that there is some freedom of manoeuvre with regard to prices whilst in so far as egg producers are concerned it recognizes that their market position vis-a-vis purchasers is weak and that in that sector competition is particularly keen. It states that in order to reply to the question whether the obligation to purchase laid down by Regulation No 563/76 had an effect on the price of eggs it is necessary not only to take into account the actual market conditions but also to make a more general analysis of the economic mechanisms governing the market in question.
The extremely technical nature of this analysis makes it difficult for me to reach a conclusion on the substance of the case. I consider that the Court should as a result order an expert's report on this question too enabling light to be thrown on a problem which is so important with regard to the assessment of the damages.
With regard to (d), during these proceedings the harmful economic effects of Regulation No 563/76 have been examined in relation also to the trend of the applicants' production costs and of their profit margins. I should like to emphasize that these assessments do not in my opinion affect the nature of the damage and the method of ascertaining its amount: the damage consisted, as I have said, in the heavier burden borne by the applicants as a result of the increase in the prices of feeding-stuffs caused by the abovementioned regulation, and the determination of the amount of damage requires essentially the solution of the two problems of the influence of other factors on the increase in the prices of feeding-stuffs and of the possibility of passing on the burden to the applicants' customers. In fact, it is of interest from another point of view to establish to what extent Regulation No 563/76 has affected the production costs of the applicants and their profit margins: in other words, in case the requirement of the seriousness of the breach by the Council is related to the seriousness of the damage suffered by the applicants.
I have already examined this theoretical possibility and I considered that I should reject it for the reasons already explained: however, some of the considerations put forward by the parties in this respect serve to complete the description of the economic assessments made by those concerned.
It is necessary to state first that the parties disagree with regard both to the determination of the extent and to the assessment of the seriousness of the increase in the production costs of the applicants. The defendants do not appear to admit that there was an increase of more than 1 %, whilst the applicants assess that increase at 2 % on average. Even in the latter case, according to the defendants, it is impossible to consider the damage as serious. The applicants however maintain that because of the very small profit margin characteristic of the sector, an increase in costs of this magnitude is of considerable importance.
In fact, it is impossible to let matters rest with the mere statement that the effects of the obligation to purchase powdered milk on the final cost of the applicants' products represent a small percentage. In order to establish the real importance of those effects from the point of view of business management, it is necessary to examine what relation such an increase in the level of production costs bears to the profit margin. Such an assessment should be carried out separately in relation to each undertaking; but if the intention were to argue in general terms it would be necessary to adopt as a reference value the average profit margin of well-managed undertakings in that sector.
This reference value is lacking: the statements made by the parties are not corroborated by convincing evidence. According to the applicants the increase in production costs which occurred as a result of Regulation No 563/76 goes in some cases as far as absorbing ail the annual profit margin and sometimes even as far as causing higher losses. The latter case seems to be that of the applicant in Case 83/76, which states that it suffered a loss muchgreater than the average annual profit. The applicant in Case 40/77 claims in its turn that the effects of the regulation in question practically reduced its profits to nothing in the period in which the regulation was applicable, and the applicant in Case 94/76 makes the same statement. Only the applicants in Cases 4/77 and 15/77 were affected to a proportionately lesser degree by the regulation, having suffered, according to their statements, a reduction of approximately 20 % in the annual profit.
The defendants state that the egg producers obtained export facilities in compensation because of wide and intensive application of the system of refunds. But we must ask whether and to what extent such facilities were granted in connexion with the burden imposed by the regulation in question. In other words, there is nothing to show that the amount of those benefits, which already existed before Regulation No 563/76 and which continued to exist afterwards, would have been different if that regulation had not been adopted.
With regard to the system of Community levies to which the Commission refers, the applicants observe that it can only help to restrict competition from products from third countries. On the other hand, in this connexion the applicants emphasize that the increase in costs caused by the obligation to purchase powdered milk was not in fact taken into consideration for the purposes of the fixing of the amount of the levy applicable to the importation of poultry and products derived therefrom since the levy varies only according to the changes in the difference between the price of feed grain on the Community market and the price of the same cereals on the world market, whilst it is not influenced by changes which have occured in other sectors.
Finally, the question of the relative effect of the increases in price of soya beans arises again when the increase in the production costs and the reduction in the profits of the undertakings concerned is discussed. Although it is true that these increases had a much greater influence on the applicants' production costs than the obligation to purchase milk powder resulting from Regulation No 563/76, it is also necessary to observe that the undertakings in question could perhaps have borne such increases by reducing their profit margin in proportion but that precisely in view of this the effect of the obligation to purchase powdered milk had extraordinarily serious repercussions on the economic situation of the undertaking.
In view of objective factors which made the situation of the undertakings in question worse the liability of the Council is in fact even clearer since, by adopting and maintaining the measure in consideration, the Council increased the economic difficulties of the undertakings in that sector when, as the Court has held, it was not necessary to attain the objectives in view.
It seems to me however to be impossible in the present state of the file to express a conclusive view on the very delicate technical and economic aspects of this complex situation. I conclude from this that if the Court were to decide that the seriousness of the breach depends on the seriousness of the damage, it would be difficult to establish the latter without a previous measure of inquiry.
10.
I conclude by suggesting to the Court that, in giving judgment on the applications for damages lodged against the Council and the Commission by the undertakings Bayerische HNL, Bernd Adleff, F. X. Zoller, Christof Schwab and Johann Seidl, it should decide as follows:
(a)
Council Regulation (EEC) No 563/76 of 15 March 1976, which has already been declared null and void by the judgments of 5 July 1977 in Cases 114, 116, 119 and 120/76 which were referred to the Court for preliminary rulings, was in serious breach both of the superior rules of non-discrimination and proportionality conferring rights on individuals and of the second subparagraph of Article 40 (3) and Article 39 of the EEC Treaty.
(b)
Consequently, the Community must pay compensation for the damage which the applicants have suffered as a result of the application of the above-mentioned regulation.
(c)
The amount of the damages for which compensation is payable will have to be established during the course of the proceedings unless the parties inform the Court within six months from the date of this judgment that they have reached agreement as to the amount thereof.
(
1
)	Translated from the Italian.