5.

I have already emphasized that the basic provision relating to compensatory amounts (Regulation No 974/71 of the Council, Article 3) is characterized by an obligation imposed on the Commission to alter the said amounts in accordance with any currency fluctuation exceeding a specified percentage. In a wider context, the Court of Justice has referred to the ‘duty of the Community institutions to modify the system whenever this appears necessary in order to ensure that it performs its corrective function’ (the afore-mentioned judgment of 10 December 1975Cooperatives Agricoles de Cereales v Commission and Council). This is quite in accordance with the logic of the system as it should always be borne in mind- that the system was established not to protect the individual interests of traders but to prevent the difficulties which monetary instability might cause to the functioning of the common organizations of the market, that is, in order to protect a general interest (see primarily the judgments of 15 May 1975 in Case 74/74 CNTA, loc at., and of 17 March 1976 in Joined Cases 67 to 85/75 Lesieur Cotelle, loc. cit.). It is evident that the effective discharge of the functions assigned to the system of compensatory amounts demands that modifications be made with great speed. The Commission has, on occasion, derogated from that basic rule, but only for exceptional reasons, as occurred in respect of certain sudden variations in the monetary exchange rates caused by speculative movements, in so far as the rates recorded during one week could not be considered representative of the real situation in respect to the currency subjea to speculative pressure (see Regulation No 1356/76 of 11 June 1976 (Official Journal L 153 of 1976, p. 39) and Regulation No 283/78 of 10 February 1978 (Official Journal L 41 of 1978, p. 25). Regulation No 2405/76 of 1 October 1976 which maintained at the existing level the compensatory amounts applicable to trade in agricultural products coming from and going to Great Britain, although the conditions laid down by Article 3 of Regulation No 974/71 for the compulsory modification of such amounts were fulfilled, thus constitutes an exceptional derogation from the aforesaid basic rule. However, as distinct from the two cases of derogation referred to above, in which the preceding level of compensatory amounts was purely and simply confirmed and was thus intended to remain in force for the whole of the following week, Regulation No 2405/76 clearly stated in its preamble that the preceding level was maintained as a precautionary measure pending an urgent decision on the matter by the Council. Traders in the sector could not be unaware of either the objeaive or the aleatory nature of that decision. No guarantee could be given that the Council would accept the Commission's proposal, quite apart from the fact that the opposition of the British Government had already been anticipated by the press. On the other hand, if that proposal was rejected no reliance could be placed on the possibility that the Commission would further delay complying with its specific obligation under the aforesaid Article 3 of Regulation No 974/71 to fix a new level of monetary compensatory amounts for exports from and imports into the United Kingdom. Taking account of the urgent nature of the Commission's proposal and of the purely precautionary nature of Regulation No 2405/76 it was logical to expect that the Council's decision, whether positive or negative, would be taken extremely quickly and it was to be foreseen that if the decision was negative it would probably be followed by the immediate fixing of new monetary compensatory amounts. The least that may be said is that it would not be justifiable to exclude altogether that latter possibility. The persons concerned were acquainted with the circumstances and could not be unaware of the logic and requirements of the system, which may be objectively inferred from the legislative provisions. Also on the basis of objective rules (those relating to the alteration of the monetary compensatory amounts), the persons concerned were in a position to forecast the possible new level with a considerable degree of accuracy. That was, moreover, stated by the Commission in the explanatory observations accompanying its proposals for the fixing of a new rate for the British ‘green’ pound. The objection may be made that the regulation fixing the new rate for the British ‘green’ pound was to enter into force only on 11 October according to the proposal of the Commission. In my opinion, however, that does not imply that the Commission was obliged to maintain the compensatory amount at its existing rate until the said date if its proposal was not accepted. It is true that when the Commission alters the level of the compensatory amounts it normally provides that the application of the new amounts is to take effect from the beginning of the week following the adoption of the provision making the amendment. It is also true, however, that the correlation of the compensatory amounts to the actual exchange situation must be checked each week and that the difference recorded in the rates each week compared with the preceding level must, if the conditions set out in the said Article 3 are fulfilled, be reflected in the level of the compensatory amounts applicable from the beginning of the week following the week in which the rate was recorded. When, as in the present instance, for exceptional reasons the Commission does not immediately comply with this basic rule and decides instead to suspend action temporarily in anticipation of an alternative solution proposed to the Council there evidently exists an anomalous situation which is clearly characterized as such in relation to the persons concerned. The anomaly is inherent in the measure ‘freezing’ the previous rates which, as I have said, constitutes a derogation from the system laid down by the said Article 3 of the basic regulation; such a measure cannot be regarded as being equivalent to a provision which merely confirms an existing situation. Accordingly, in such an exceptional situation and in respect of a regulation which expressly provides that it is of a purely transitional nature, it is not opportune to make reference to the normal practice whereby the determination of the compensatory amounts remains applicable for a whole week. Nor, in the present case, does it appear to me relevant to refer to the criterion whereby it is unjustifiable to adopt with immediate effect and without notice a legislative provision which detrimentally affects the performance of existing contracts when no absolute public interest stands in the way of the introduction of transitional measures. This criterion, which was invoked by British Beef, has indeed been applied by the Court of Justice, though not with regard to the validity of legislative measures but with regard to the noncontractual liability of the Community, and in particular in respect of an exporter who had obtained advance fixing of refunds, thereby assuming in relation to the Community an irrevocable undertaking, guaranteed by a security, to carry out the operations which were relevant for the purposes of the application of monetary compensatory amounts (Case 74/74 CNTA loc cit. at p. 549). The situation which we are considering in the present instance is quite different. It is also necessary to bear in mind that if the Commission had maintained the ‘freeze’ for the whole of the week beginning 4 October, in spite of the obligation imposed upon it by Article 3 oi the aforesaid basic regulation, it would have run the risk of being held liable for any damage suffered by British importers of agricultural products who would not have benefited from an increase in the compensatory amounts such as to compensate for the greater difference between the real exchange value of their currency and the fictitious relationship between it and the European unit of account. Finally, much argument was devoted in the course of the proceedings to the assurances supplied by the Meat and Livestock Commission in its telex messages of 29 September and 1 October. Apart from the fact that the first message was subjea to confirmation and that the second, while giving that confirmation, stated at the same time that the situation was ‘unclear’, it must be said that before entering into export obligations traders in that sector should have reflected on the text of the aforesaid Commission Regulation No 2405/76 of 1 October 1976 and on the exceptional nature of the derogation contained therein from the basic provision. The faa that they were nevertheless satisfied with the forecast made by a national body in the sector (which was not acting on behalf of the Community) as to the probable course of events is not sufficient to render their expectation ‘legitimate’. From an objective point of view the situation was clearly very precarious and dependent on the Council's decision. The risk that the Council might not accept the Commission's proposal and that accordingly the temporary ‘freezing’ of the compensatory amounts would be discontinued was reasonably foreseeable. The expectation that the amounts in force would be maintained for the whole of the week commencing 4 October rested on very shaky foundations.