Judgment of the Court (First Chamber) of 28 February 1989. - Cargill BV v Produktschap voor Margarine, Vetten en Oliën. - Reference for a preliminary ruling: College van Beroep voor het Bedrijfsleven - Netherlands. - Subsidy for oilseeds - Advance fixing - Suspension. - Case 201/87.



European Court reports 1989 Page 00489



Summary

Parties

Grounds

Decision on costs

Operative part



Keywords

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Agriculture - Common organization of the markets - Oils and fats - Subsidy for oilseeds - Advance fixing - Suspension - Condition to be fulfilled - Abnormal market situation - Mere possibility of disturbance deriving from a material error in the fixing of conversion rates for the subsidy - Illegality of the suspension - Consequences

( Council Regulation No 1594/83, Art . 8(1 ); Commission Regulations Nos 735 and 756/85 )

Summary

When Regulation No 756/85 suspending advance fixing of the subsidy for colza, rape and sunflower seed was adopted, the Commission could validly decide to suspend advance fixing only if there was in fact an abnormal situation on the Community market in oilseeds . A material error does not of itself constitute an abnormal market situation and does not of itself necessarily entail the risk of such a situation occurring . The mere possibility that an abnormal situation might arise following a material error in the conversion rates for the subsidy could not therefore justify the suspension of advance fixing of the subsidy . Accordingly, having regard to Article 8(1 ) of Council Regulation No 1594/83, Commission Regulation No 756/85 is invalid .

The invalidity of Regulation No 756/85 implies that a trader which applied for a certificate with advance fixing under Regulation No 735/85 is entitled to be placed in the same situation as that which would have obtained if the advance fixing had not been suspended . So long as the latter regulation has not been declared invalid, the invalidity of Regulation No 756/85 means that the national authorities must issue to the trader concerned with retroactive effect the advance-fixing certificates applied for and pay it the subsidy in the sum fixed by Regulation No 735/85 .

Parties

In Case 201/87

REFERENCE to the Court under Article 177 of the EEC Treaty by the College van Beroep voor het Bedrijfsleven for a preliminary ruling in the proceedings pending before that court between

Cargill BV, whose registered office is in Amsterdam, the Netherlands,

and

Produktschap voor Margarine, Vetten en Oliën, The Hague, ( the Netherlands ),

on the validity of Commission Regulation No 756/85 suspending advance fixing of the subsidy for colza, rape and sunflower seed ( Official Journal 1985, L 81, p . 38 ) and the consequences which the invalidity of the regulation would entail for the issue of advance-fixing certificates applied for during the suspension of the advance fixing,

THE COURT ( First Chamber )

composed of : R . Joliet, President of Chamber, Sir Gordon Slynn and G . C . Rodríguez Iglesias, Judges,

Advocate General : G . Tesauro

Registrar : B . Pastor, Administrator

after considering the observations submitted on behalf of

Cargill BV, the plaintiff in the main proceedings, by E . H . Pijnacker Hordijk, of the Brussels Bar,

the Commission of the European Communities, by its legal adviser R . C . Fischer, and P . Hetsch, a member of its Legal Department, acting as Agents,

having regard to the Report for the Hearing and further to the hearing on 9 November 1988,

after hearing the Opinion of the Advocate General delivered at the sitting on 14 December 1988,

gives the following

Judgment

Grounds

1 By order of 10 June 1987, which was received at the Court Registry on 2 July 1987, the College van Beroep voor het Bedrijfsleven ( Administrative court of last instance in matters of trade and industry ) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions concerning the validity of Commission Regulation No 756/85 of 22 March 1985 suspending advance fixing of the subsidy for colza, rape and sunflower seeds ( Official Journal 1985, L 81, p . 38 ) and the consequences which the invalidity of the regulation would entail for the issue of advance-fixing certificates applied for during the suspension of advance fixing .

2 The questions were raised in proceedings in which Cargill BV seeks the annulment of a decision whereby the Produktschap voor Margarine, Vetten en Oliën (" the Produktschap "), the defendant in those proceedings, refused to issue to it advance-fixing certificates in respect of the subsidy for the processing of a quantity of sunflower seeds .

3 By Regulation No 735/85 of 21 March 1985 ( Official Journal 1985, L 80, p . 18 ) the Commission had fixed the amount of the subsidy for the processing of sunflower seeds with effect from 22 March 1985 .

4 On 22 March 1985, Cargill BV purchased 10 000 tonnes of sunflower seeds in France and asked the Produktschap to issue it with advance-fixing certificates for the processing thereof . In the normal course of events, those certificates would have been issued the following day .

5 In the mean time, however, the Commission had discovered an error in the conversion rates for the subsidy set out in an annex to Regulation No 735/85 leading to the grant of a subsidy higher than that envisaged by Article 27 of Regulation No 136/66 of the Council of 22 September 1966 on the common organization of the market in oils and fats ( Official Journal, English Special Edition 1966, p . 221 ). Under that provision, the subsidy must be equal to the difference between the Community target price and the world price .

6 On 22 March 1985 the Commission then adopted Regulation No 755/85 ( Official Journal 1985, L 81, p . 36 ) changing the amount of the subsidy to its correct value as from the following day .

7 The Commission also considered that its error created the risk of applications for advance fixing being lodged for quantities of seeds disproportionate to the normal outlets for seeds harvested in the Community . To counter that risk, it adopted, also on 22 March 1985, Regulation No 756/85, which was stated to enter into force on 23 March 1985 and suspended advance fixing for applications which had been lodged, as in the present case, on 22 March 1985 .

8 That regulation is based on Article 8 of Regulation No 1594/83 of 14 June 1983 on the subsidy for oilseeds ( Official Journal 1983, L 163, p . 44 ). The first paragraph of that provision is worded as follows :

"1 . If the situation of the Community seed market is abnormal, and in particular if the volume of applications for advance fixing of the subsidy does not appear to be related to normal outlets for seeds harvested in the Community, it may be decided, if the certificate referred to in Article 4 has not yet been issued, to alter the amount of the subsidy and to suspend the advance fixing of this amount, to the extent necessary to restore the balance between the Community market and the world market ".

9 Article 8 of Regulation No 1594/83 also provides that the suspension of advance fixing is normally to be decided in accordance with the management-committee procedure but that in case of emergency the Commission itself may decide on such suspension .

10 By decision of 25 March 1985 the Produktschap rejected the applications for advance-fixing certificates lodged by Cargill BV, in view of the suspension of advance fixing .

11 It transpired subsequently that the applications for advance fixing of the subsidy for sunflower seeds lodged on 22 March 1985 in all the Member States related to about 40 000 tonnes, not an abnormally large quantity .

12 Cargill BV contested the Produktschap' s decision before the College van Beroep voor het Bedrijfsleven, claiming that the regulation suspending advance fixing was illegal .

13 The national court therefore submitted the following questions to the Court of Justice for a preliminary ruling :

"1 . Is Commission Regulation ( EEC ) No 756/85 of 22 March 1985, suspending advance fixing of the subsidy for colza, rape and sunflower seed, valid having regard to

( i ) the requirement laid down in Article 8(1 ) of Council Regulation ( EEC ) No 1594/83 for the exercise of the power to suspend advance fixing,

and

( ii ) the procedural provisions laid down in Article 8(3 ) of that regulation?

2 . In the event that the Court of Justice decides that Regulation ( EEC ) No 756/85 is invalid, do the Community provisions on subsidies for the processing of sunflower seed, in conjunction with Articles 5 and 176 of the EEC Treaty, mean that the national implementing institution is still obliged to issue the certificates applied for and/or to pay subsidies in accordance with the amounts laid down in Regulation ( EEC ) No 735/85 in respect of the quantities of sunflower seed concerned?"

14 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the applicable legislation and the observations submitted to the Court, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court .

The first question

15 The national court' s first question seeks to determine whether Commission Regulation No 756/85 is valid, in the light of Article 8(1 ) of Council Regulation No 1594/83 . It wishes more particularly to know whether the Commission was entitled to suspend advance fixing as soon as there were grounds for fearing the emergence of an abnormal market situation as a result of a material error in the conversion rates for the subsidy or whether the Commission could effect a suspension only when an abnormal situation had actually come about . The national court also asks whether Regulation No 756/85 was adopted in compliance with Article 8(3 ) of Council Regulation No 1594/83, which presupposes that there was an emergency, releasing the Commission from the obligation to consult the Management Committee .

16 As far as the first part of the question is concerned, it must be pointed out that in the seventh recital in the preamble to Council Regulation No 1594/83 it is stated that the suspension of advance fixing of the subsidy must make it possible to "rectify" an abnormal situation on the seed market . Article 8(1 ) of that regulation further provides that where the situation on the seed market is abnormal it may be decided to suspend the advance fixing of the subsidy to the extent necessary to "restore" the balance between the Community market and the world market . Finally, after the events at issue in this case took place, Article 8(1 ) of Council Regulation No 1594/83 was amended so as to permit the suspension of advance fixing when an abnormal situation existed which resulted "or could result" in a disturbance on the Community market for oilseeds ( Council Regulation No 935/86 of 25 March 1986 amending Regulation No 1594/83 on the subsidy for oilseeds, Official Journal 1986, L 87, p . 5 ).

17 It follows from the foregoing that, when Regulation No 756/85 was adopted, the Commission could validly decide to suspend advance fixing only if there was in fact an abnormal situation on the Community market in oilseeds .

18 It is undisputed that in this case no such abnormal situation had come about . A material error does not of itself constitute an abnormal market situation and does not of itself necessarily entail the risk of such a situation occurring, as the present case shows . The mere possibility that an abnormal situation might arise following a material error in the conversion rates for the subsidy could not therefore justify the contested suspension of advance fixing . Moreover, after the events in this case occurred, Council Regulation No 935/86 inserted in Article 8 of Regulation No 1594/83 a paragraph authorizing suspension of the advance fixing of the subsidy where "there is a material error in the amount of the subsidy which is published ". When the regulation introducing the contested suspension was adopted, the existence of such an error did not therefore constitute a valid reason for suspending advance fixing .

19 In those circumstances it must be stated in reply to the first question that, having regard to Article 8(1 ) of Council Regulation No 1594/83, Commission Regulation No 756/85 is invalid .

The second question

20 By its second question the national court seeks to determine whether the invalidity of Commission Regulation No 756/85 places the Produktschap under an obligation to issue retroactively to Cargill BV the advance-fixing certificates applied for on 22 March 1985 and to pay it the subsidy in the amount fixed by Commission Regulation No 735/85 .

21 It must be emphasized that the invalidity of the regulation which suspended the advance fixing implies that Cargill BV is entitled to be placed in the same situation as that which would have obtained if the advance fixing had not been suspended . As regards Commission Regulation No 735/85 which, according to the parties, contains a material error, it must be deemed to be valid until such time as it is declared invalid . The question of the validity of the latter regulation has not been raised in these proceedings .

22 It must therefore be stated in reply to the second question that so long as Commission Regulation No 735/85 has not been declared to be invalid, the invalidity of Commission Regulation No 756/85 means that the Produktschap must issue to Cargill BV with retroactive effect the advance-fixing certificates applied for on 22 March 1985 and pay it the subsidy in the sum fixed by Commission Regulation No 735/85 .

Decision on costs

Costs

23 The costs incurred by the Commission of the European Communities, which has submitted observations to the Court, are not recoverable . Since these proceedings are, in so far as the parties to the main proceedings are concerned, in the nature of a step in the action pending before the national court, the decision on costs is a matter for that court .

Operative part

On those grounds,

THE COURT ( First Chamber ),

in answer to the questions referred to it by the College van Beroep voor het Bedrijfsleven, by order of 10 June 1987, hereby rules :

( 1 ) Having regard to Article 8(1 ) of Council Regulation No 1594/83, Commission Regulation No 756/85 is invalid .

( 2 ) So long as Commission Regulation No 735/85 has not been declared to be invalid, the invalidity of Commission Regulation No 756/85 means that the Produktschap must issue to Cargill BV with retroactive effect the advance-fixing certificates applied for on 22 March 1985 and pay it the subsidy in the sum fixed by Commission Regulation No 735/85 .