OPINION OF MR ADVOCATE-GENERAL WARNER

DELIVERED ON 26 FEBRUARY 1976

My Lords,

The applicant in each of these nineteen actions is a French oil-miller. The actions are brought against the Commission under Article 178 and the second paragraph of Article 215 of the EEC Treaty for damages in respect of that Institution's allegedly wrongful exercise, in the early part of 1972, of its powers relating to subsidies and to monetary compensatory amounts (which I shall call for short ‘m.c.a.'s’) on colza and rape seed.

Your Lordships will remember that the common organization of the market in oils and fats was established by Council Regulation No 136/66/EEC of 22 September 1966. So far as colza and rape seed, and oil extracted from them, are concerned, that organization has regard to the circumstance that Community production falls short of demand, so that the Community is dependant to a large extent on the world market for supplies. It also has regard to the obligations of the Community under the GAIT.

The upshot is that colza and rape seed produced in third countries enter the Community free of any customs duty or levy, and that colza and rape oil so produced are subject only to a very low customs duty.

The authors of the Regulation wished however to support Community farmers growing colza and rape and in particular to enable such farmers to obtain better prices than those ruling on the world market. To this end they instituted intervention machinery of the usual kind, related to a target price: see Articles 21 to 26 of the Regulation. To ensure that Community grown colza and rape seed could nonetheless be marketed in competition with lower-priced seed grown outside the Community, they resorted to two devices: a subsidy for Community grown seed processed in the Community and a refund for Community grown seed exported to third countries. The subsidy is provided for by Article 27 of the Regulation, the refund by Article 28.

The present cases are entirely concerned with Community grown colza and rape seeds that were processed in the Community (by the applicants) and therefore attracted the subsidy and not any export refund. Although arguments were advanced on both sides as to the relationship between the subsidy and the export refund, I do not for my part think it necessary to consider the details of the legislation relating to the latter. I must however, I think, advert in some detail to the legislation about the subsidy.

Article 27 (1) provides:

‘Where the target price in force for a species of seed is higher than the world market price for that seed determined in accordance with the provisions of Article 29, a subsidy shall be granted for seed of that species harvested and processed within the Community. Subject to exceptions made pursuant to paragraph 3, this subsidy shall be equal to the difference between these prices.’ (OJ 1966 of 30. 9. 1966, p. 3025.)

Article 27 (3) required the Council to lay down inter alia‘the principles governing the grant of the subsidy’, ‘rules for checking entitlement to the subsidy’ and ‘the conditions under which advance fixing of the amount of the subsidy may be allowed’.

Article 27 (4) provides that ‘the amount of the subsidy shall be fixed by the Commission’.

Article 29 provides:

‘The world market price, calculated for a Community frontier crossing point, shall be determined on the basis of the most favourable purchasing opportunities, prices being adjusted were appropriate, to take the prices of competing products into account. The criteria for such determination shall be laid down and the frontier crossing point to be fixed for each species of seed shall be specified by the Council …’ (OJ 1966 of 30. 9. 1966, p. 3025.)

Such criteria are laid down by Council Regulation No 115/67/EEC of 6 June 1967 (OJ 1967 of 10. 6. 1967, p. 2196.) Article 1 (1) of that Regulation provides that ‘the Commission shall determine a world market price for colza and rape seeds … at regular intervals’. Articles 2 and 3 have a bearing on this case, but only in relation to one particular issue and I think that it will be better if I set out their provisions when I come to deal with that issue. Article 4 provides that ‘the Community frontier crossing point shall be Rotterdam’. Article 6, by way of implementation of the provision in Article 29 of Regulation No 136/66 that world prices should be adjusted, where appropriate, to take the prices of competing products into account, and of which the purpose, according to the preamble to Regulation No 115/67 was to prevent Community processers from being encouraged to prefer one type of seed to another, is in these terms.

‘1. When the world market price for a type of seed is being determined, the price used shall be adjusted by an amount not exceeding the margin between: — the difference between the price of 100 kilogrammes of colza, rape or sunflower seeds, plus processing costs, and the total of the prices of the quantities of oil and oil-cake resulting from the processing of the type of seed in question and — the difference between the price of 100 kilogrammes of one or more other seeds, plus processing costs, and the total of the prices of the quantities of oil and oil-cake resulting from processing these seeds.

2. When the amount referred to in paragraph 1 is being determined, account shall be taken of the incidence of the margin in question (a) on marketing operations of Community traders, (b) on the disposal of the various types of seed on the world market.’ (OJ 1967 of 10. 6. 1967, p. 2196.)

Effect was given by the Council to Article 27 (3) of Regulation No 136/66 through Regulation No 116/67/EEC of 6 June 1967 (OJ 1967, of 10. 6. 1967, p. 2198.). (This remained in force until 1 July 1972, when it was repealed and replaced by Council Regulation (EEC) No 2114/71 of 28 September 1971 (OJ L 222 of 2. 10. 1971) as amended by Council Regulation (EEC) No 2730/71 of 21 December 1971).

Article 2 of Regulation No 116/67 provided that each Member State should institute a system of control of inter alia colza and rape seeds processed at oil mills to ensure that subsidy was received only for seeds that qualified for it.

Articles 3 to 6 laid down as general rules that the amount of the subsidy was to be that applicable on the day on which the Member State concerned took over control of the seeds at the oil mill in which they were to be processed and that proof of seeds having been placed under such control was to be afforded by the issue of a certificate. The same Articles provided however for a system of advance fixing of the subsidy. Under this system the amount of the subsidy was to be equal to the difference between the target price for the month when the seeds were placed under control and the average of the last four world market prices to have been fixed before the date of lodgment of the application for the certificate. The certificate then showed the amount of the subsidy so fixed. Where a trader took advantage of this facility, the issue of the certificate was to be subject to the lodging of a deposit to guarantee the obligation to place the seeds under control, in an oil mill situated in the Member State concerned, during the period of validity of the certificate. This deposit was to be forfeited if the seeds were not placed under such control during that period.

Article 9 (1) provided that entitlement to the subsidy should be acquired when the seeds were processed for the production of oil. This was subject to a proviso to the effect that the subsidy could be paid in advance, as soon as the seeds had been placed under control, if a guarantee for their processing was lodged.

Article 9 (2) provided for the subsidy to be paid to the holder of the certificate in the Member State responsible for issuing the certificate.

To complete that account of the legislation about the common organization of the market in oils and fats in so far as it is relevant in these cases I should mention that Article 1 of Commission Regulation No 225/67/EEC of 28 June 1967 (OJ 1967 of 30. 6. 1967, p. 2919) provides that the world market price for colza and rape seed shall be determined at least once a week.

At the hearing Counsel for the applicants described the era when that organization was adopted as the ‘golden age’ of the Common Agricultural Policy. It was the era of fixed exchange rates, when the preamble to Council Regulation No 129 of 23 October 1962 (the Regulation upon whose provisions the decision in this case must, in my opinion, at the end of the day, turn) could recite that:

‘… it is necessary to fix the rate of exchange to be used for measures taken in pursuance of the common agricultural policy which require sums given in one currency to be expressed in another currency; … all Member States and a large number of third countries have communicated par values for their currencies to the International Monetary Fund and … the latter has recognized these par values; … under the rules of the Fund, exchange rates which apply to current transactions and are recorded on foreign exchange markets supervised by the monetary authorities of countries the par values of whose currencies have been recognized by the Fund may differ from parity only within narrow limits; … therefore, the use of the exchange rate corresponding to parity normally makes it possible to avoid monetary difficulties which might hinder the implementation of the common agricultural policy;

… since the unit of account is defined solely as a weight of gold, either the gold parity or the US dollar parity of national currencies as communicated to and recognized by the International Monetary Fund must of necessity be used to express in national currencies sums given in units of account and vice versa.’ (OJ 1962 of 30. 10. 1962, p. 2553.)

Article 1 of the Regulation provides:

“Where, in instruments concerning the common agricultural policy which are adopted by the Council under Article 43 of the Treaty, or in provisions adopted pursuant to those instruments, sums are expressed in units of account, the value of that unit of account shall be 0.88 867088 grammes of fine gold.” (OJ 1962 of 30. 10. 1962, p. 2553.)

This was, at the time when Regulation No 129 was adopted, exactly the par value of the US dollar.

Article 2 (1) provides that:

“Where measures taken in pursuance of the instruments or provisions referred to in Article 1 require sums given in one currency to be expressed in another currency, the exchange rate to be applied shall be that which corresponds to the par value communicated to and recognized by the International Monetary Fund.” (OJ 1962 of 30. 10. 1962, p. 2553.)

Article 3 provides:

“1. Where monetary practices of an exceptional nature are likely to jeopardize the implementation of the instruments or provisions referred to in Article 1, the Council or the Commission, acting within their powers under those instruments or provisions and in accordance with the procedures laid down therein for each individual case, may, after consulting the Monetary Committee, make derogations from this Regulation, in particular in the following cases:

(a) when a member country of the International Monetary Fund, having communicated a par value and had it recognized by the Fund, allows the value of its currency to fluctuate beyond the limits laid down under the rules of the Fund;

(b) when a country resorts to abnormal exchange techniques such as floating or multiple exchange rates or applies a barter agreement;

(c) in the case of countries whose currency is not quoted on official foreign exchange markets.

2. However, in an emergency the measures provided for in the preceding paragraph may be taken without prior consultation with the Monetary Committee but provided that at the same time a request for an Opinion is addressed to that body. In such cases these exceptional measures shall apply provisionally; definitive measures shall be taken only after an Opinion has been received from the Monetary Committee.” (OJ 1962 of 30. 10. 1962, p. 2553.)

The beginning of the end of the “golden age” was heralded by the devaluation of the French franc in the summer of 1969, followed by the revaluation of the DM in the autumn of the same year. These necessitated special measures to safeguard the working of the common agricultural policy.

The end actually came in the spring of 1971 when the DM and the Dutch guilder were allowed to float. This led to the introduction of m.ca.'s by Council Regulation (EEC) No 974/71 of 12 May 1971 and two implementing Regulations of the Commission dated 17 May 1971, namely Regulations (EEC) No 1013/71 and 1014/71. Initially, under these Regulations, m.ca.'s applied only in the Federal Republic of Germany and in the Netherlands.

In August 1971 the USA, without altering the official parity of the US dollar, suspended its convertibility into gold. This meant that although the par value of the dollar communicated to and recognized by the IMF remained unchanged the actual or market value of the dollar depreciated.

The system of m.ca.'s, whilst not originally designed to cope with this situation, was in fact appropriate to do so, because Article 2 of Regulation No 974/71 provides:

‘The compensatory amounts for the products covered by intervention arrangements shall be equal to the amounts obtained by applying to the prices the percentage difference between:

— the parity of the currency of the Member State concerned declared to and recognized by the International Monetary Fund, on the one hand, and

— the arithmetic mean of the spot market rates of this currency against the US dollar …’ (OJ L 106 of 12. 5. 1971.)

The system of m.ca.'s was extended in two stages to the Member States to which it had not initially applied. It was extended to Belgium and Luxembourg in August 1971 and it was extended to France and Italy by Commission Regulation No 2887/71 of 30 December 1971. (OJ L 288 of 31. 12. 1971.)

By the combined effect of that Regulation and of Commission Regulation (EEC) No 2888/71 also adopted on 30 December 1971 m.ca.'s were declared to be chargeable as from 24 December 1971 on imports into France from third countries unless effected under contracts made before 19th December 1971.

The amounts of the m.ca.'s to be charged were set out in Annexes to Commission Regulation (EEC) No 17/72 of 31 December 1971 (OJ L 5 of 6. 1. 1972). Annex IX related to fats and oils, and in particular to colza and rape seeds. It fixed a rate of FF 3·95 per 100 kg for imports of such seeds from third countries into France. The amounts were modified by Commission Regulation (EEC) No 144/72 of 21 January 1972 (OJ L 19 of 23. 1. 1972). This raised the rate in question, with effect from 24 January 1972, from FF 3·95 to FF 4·75 per 100 kg.

However, on 26 January 1972, the Commission adopted Regulation (EEC) No 189/72 (OJ L 24 of 28. 1. 1972) by which it repealed Annex IX with effect from 1 February 1972. The result was that, as from that date, m.ca.'s were no longer payable on imports of colza or rape seed into any Member State.

The applicants in these actions were all holders of certificates fixing in advance the subsidy provided for by Article 27 of Regulation No 136/66. Their claims fall into two categories.

The first relates to certificates that were applied for during the period between 24 December 1971 and 31 January 1972, when m.ca.'s were payable on imports of colza and rape seed into France, but under which the applicants were entitled to receive the subsidy only after the end of that period, when the seeds were either processed or taken into control with a guarantee that they would be processed.

The second category of claims relates to certificates that were applied for during the months of February and March 1972.

The claims of the applicants in Cases 67/75, 68/75, 71/75, 73/75, 79/75, 81/75, 83/75 and 85/75 fall within the first category, the claims of the applicants in Cases 72/75, 76/75, 77/75 and 84/75 fall within the second category and the claims of the applicants in Cases 69/75, 70/75, 74/75, 78/75, 80/75 and 82/75 fall within both categories.

It is common ground between the parties that during the whole of the relevant period, the world market prices of colza and rape seed were determined by the Commission, for the purpose of fixing the subsidy, on the basis of quotations for Canadian colza seed, cif Rotterdam, expressed in US dollars. It is also common ground that for this purpose the Commission treated the US dollar as still worth its par value as communicated to and recognized by the IMF. The result was that the subsidy was fixed on the basis of fictitious world market prices, higher than the real world market prices.

The applicants' case is, as I understand it, that this did not matter so long as m.ca.'s were charged on imports from third countries because the m.ca.'s compensated for the difference between the fictitious world market prices and the real ones. Essentially the applicants' complaint is against the removal of the m.ca.'s without any consequential adjustment of the subsidy. As a result of this, the subsidy no longer covered the whole of the difference between the Community target price and the price at which colza and rape seed from third countries could be marketed in the Community. Article 27 of Regulation No 136/66 was thus, the applicants contend, infringed.

More specifically, it is contended on behalf of the applicants that the Commission was in breach of its duty under Article 1 (3) of Regulation No 115/67 to determine the world market price ‘on the basis of the most favourable actual purchasing opportunities’. It was also contended that the wrong suffered by the applicants was all the more real in that they had purchased seed grown in France from licensed dealers (‘intermédiaires agréés’) at a price near to the target price, and so had in effect passed on the subsidy, through those dealers, to the producers, before receiving it themselves. It was further submitted on their behalf that the conduct of the Commission infringed three fundamental principles enshrined in the EEC Treaty. First it infringed the principle of Community preference, by making it more attractive for Community oil-millers to buy seed produced in third countries than seed grown in the Community. Second it infringed the principle that competition within the Community should not be distorted, because it enabled Community oil-millers who were not bound by long-term contracts for the purchase of Community grown seed to buy seed produced in third countries on more favourable terms. Third, it infringed the principle of non-discrimination between traders in the different Member States, inasmuch as, since the currencies of those States did not all appreciate vis-à-vis the US dollar to the same extent, oil-millers in some of them were able to obtain seed on the world market more cheaply than their competitors in other Member States.

The applicants make no complaint about the conduct of the Commission after 31 March 1972. This is because, as from 1 April 1972, the Commission, in determining the world market prices of colza and rape seed, exercised the discretion conferred on it by Article 6 of Regulation No 115/67 to adjust that price in the light of the comparative profitability of processing such seeds and processing other types of seed. That adjustment apparently had the effect of increasing the subsidy to a figure that the applicants considered to be adequate.

In May 1972 the USA communicated a new parity for the US dollar to the IMF and this new parity was thenceforth used in calculating the subsidy.

It is I think right to emphasize that the applicants do not complain of the abolition of the m.ca.'s as such. Being millers and not exporters of Community grown seeds they were not entitled actually to receive m.c.a.'s (except perhaps on exports of oil, but that is not the subject-matter of this case). Moreover there is ample authority in this Court that m.ca.'s may only be applied where they are necessary to avoid disturbance of the functioning of the common organization of the market in particular products; that the Commission is bound to abolish them where it is satisfied that market conditions make them unnecessary for that purpose; and that the Commission has in this respect a wide power of appraisal — see in particular the Judgment in Case 74/74 CNTA v Commission [1975] ECR at p. 545 et seq. The applicants' essential complaint is, as I have said, that the Commission abolished the m.ca.'s without increasing the subsidy.

The applicants did submit in their pleadings that, in abolishing the m.ca.'s without affording them the benefit of any transitional provisions, the Commission had disappointed their legitimate expectations and was liable to them in damages on that ground. They said that they had bought Community grown seed at the Community price only to find that they must sell the resultant oil in a market where the lower world prices ruled. The applicants did not however press this submission at the hearing. It seems to me that it was a hopeless one. M.ca.'s were, as I have mentioned, made applicable in France by Regulation No 2887/71. This was published on 31 December 1971. They were abolished as regards oils and fats by Regulation No 189/72, which was published on 28 January 1972. So it was at most for a period of only 28 days that any of the applicants can have taken any business decision in the expectation of the continued existence of m.ca.'s. Yet the Court was informed at the hearing by Counsel for the applicants that the contracts under which they bought seed were long-term ones, running for some eight months, and that this was inevitable because the contracts under which they sold oil-cake were also longterm ones. The commercial realities were such that they had no option but to continue milling, whether or not their home market was protected by m.ca.'s. There was in fact no evidence that any of the applicants had bought or milled a single ton of seed, or applied for a single subsidy certificate, in reliance on the continued existence of the m.ca.'s. Nor, moreover, was there any evidence that the abolition of the m.ca.'s had affected the price of oil on the French market and so caused the Applicants to incur losses or make lower profits. I would add that a document put in by the applicants, the minutes of a meeting of the Board of the Societe Interprofessionnelle des Oleagineux held in Paris on 18 January 1972 (Annex I to the Reply) evinces that it was known as early as that date that the Commission favoured the abolition of m.ca.'s on colza seed and oil.

At the hearing, it was suggested on behalf of the Commission that these actions, in so far as they are founded on what I have described as the applicants' essential complaint, were inadmissible, because what the applicants were really claiming was an additional subsidy and for this they should have sued the French authority responsible for the payment of subsidy in the French Courts. Counsel for the applicants promptly objected that the inadmissibility of the actions had not been pleaded and that it was too late to raise it as an issue at the hearing.

My Lords, I do not resile in any way from what I said in Case 46/75 IBC v Commission (not yet reported) as to its being impermissible for parties before this Court to raise at the hearing issues that have not been pleaded. But I was there referring to issues of substance. A question as to the admissibility of an action, going to the jurisdiction of the Court, may be raised by the Court itself, of its own motion, at any stage of proceedings. It must I think follow that it is open to a party to canvass it at any stage.

But in my opinion these actions are admissible. The claim made by the applicants here is of a different kind from those made in Case 96/71 Haegeman v Commission (Rec. 1972 (2) p. 1005), Case 99/74 Société des Grands Moulins des Antilles v Commission (not yet reported) and IBC v Commission, in each of which it was held that the applicant's correct remedy was to sue the responsible national authority in the competent national Court and not to sue the Commission in this Court under Article 178 of the Treaty. In each of those cases the applicant was claiming payment of a liquidated sum. In the first and third cases it was a sum that the applicant contended had been wrongfully exacted from him by the national authority concerned under Community legislation which he contended was invalid. In the second case it was a sum that the applicant claimed to be entitled to receive under the relevant Community legislation. In none of those cases was there any doubt or dispute as to the quantum of the sum claimed. In the present case, in contrast, the sums claimed by the applicants are unliquidated. True the applicants sought to quantify them in their pleadings by reference to the amounts of the m.ca.'s that had been abolished. But that attempt at quantification does not stand up to examination, if only because it assumes that the market value of the US dollar remained unaltered throughout February and March 1972. Hence the applicants' alternative suggestion that the sums should be quantified by an independent expert.

The applicants' real complaint is twofold. As regards their first category of claims it is that the Commission did not, after the abolition of the m.ca.'s, in some way provide for the recomputation of the subsidies fixed in advance by reference to revised world market prices. As regards their second category of claims it is that throughout February and March 1972 the Commission, week by week, wrongly determined the world market price used in the calculation of the subsidy.

No doubt the computation of the subsidy itself, once the Community target price and the world market price are both known, is a mere matter of arithmetic. But the computation of the world market price is a matter in which the Commission is, under Regulation No 115/67, called upon to exercise wide discretionary powers. It is perhaps enough to refer in this respect to Article 6 of that Regulation. But I would refer also to Articles 2 and 3 (to which I alluded earler) and to Article 5. Articles 2 and 3 are in the following terms:

‘Article 2

Where no offer or quotation can be used as a basis for determining the world market price for a type of seed, the Commission shall determine this price on the basis of the value of average quantities of oil and oil-cake resulting from the processing of 100 kilogrammes of this type of seed in the Community less an amount corresponding to the cost of processing these seeds into oil and oil-cake.

Article 3

Where no offer or quotation can be used as a basis for determining the world market price for a type of seed and further, where it is impossible to established the value of the oil-cake or oil processed form such seeds, the world market price shall be determined on the basis of the last recorded value for the oil or oil-cake, adjusted to take account of the trend of world prices for competing products in accordance with Article 2.’ (OJ 1967 of 10. 6. 1967, p. 2196.)

Article 5 requires the Commission, where offers of quotations are otherwise than ‘for seeds of the standard quality for which the target price has been fixed, delivered in bulk at Rotterdam’ to ‘make the necessary adjustments’.

It could not in my opinion be right to hold that, in circumstances where it was contended that the Commission had determined the world market price on the wrong legal basis, the national Courts of the different Member States might be required to decide how the Commission should have exercised such discretionary powers.

In my opinion this case is akin to Case 43/72 Merkur v Commission [1973] ECR 1055, case 153/73 Holtz et Willemsen v Council and Commission [1974] ECR 675 and the CNTA case (already cited) in each of which the Court held an applicant entitled to sue under Article 178 where his complaint was of the failure of the defendant institution or institutions to confer upon him a right to receive a payment. More especially is it akin to Cases 9 & 11/71 Compagnie d'approvisionnement v Commission (Rec. 1972 (1) at p. 403) where the Court held admissible under that Article an action against the Commission brought on the ground that it had fixed certain subsidies at too low a figure.

I am however of the opinion that these actions, albeit admissible, must fail, and this for the very simple reason, which was put forward on behalf of the Commission, that it was bound, by Article 2 of Regulation No 129, to treat the US dollar, despite the suspension of its convertibility into gold, as having its par value as communicated to and recognized by the IMF. In the circumstances the Commission could have escaped from that requirement only by exercising its powers under Article 3 of Regulation No 129. This it could have done only if satisfied that the suspension of the convertibility of the dollar was ‘likely to jeopardize the implementation of the provisions of Regulation No 136/66 relating to the subsidy on colza and rape seed (and that the matter was serious enough to justify bringing the Monetary Committee into it). The applicants did not go so far as to submit that the Commission should have been satisfied of this, nor indeed would such a submission have been consistent with the fact that the Commission had (rightly or wrongly) formed the view that the m.c.a.' s’ on those products could be abolished without untoward results.

In the result, I am of the opinion that these actions should be dismissed with costs.