Judgment_paragraph I. · G.R. Amylum v Council of the European Communities (108/81)

I.The applicant maintains that the Council has contravened the generalprinciple that laws may not be retroactive by reinstating the quota and levy system for the production of isoglucose during the marketing year 1979/80.That general principle is embodied in most of the legal systems of the Member States of the Community and therefore, as the Court acknowledged in its judgment in Case 17/67 Neumann v Hauptzolkmt Hof [1967] ECR 441, applies to Community institutions when they draft legislation.According to the applicant all the national legal systems and the Community legal order distinguish “true” retroactivity (application of a legislative measure to a transaction completed entirely in the past) from “material” retroactivity (application of a legislative measure to the future consequences of situations which came into existence under an earlier law) to establish in principle the prohibition of true retroactivity.In fact, derogations from the principle of the prohibition of retroactive legislation are generally more apparent than real and concern only a limited number of cases such as interpretative or declaratory laws.(a) According to the applicant. Community law, as it has been elucidated by the case-law of the Court, follows that concept by laying down the principle that Community measures may not be retroactive save in exceptional cases where the purpose to be achieved by the legislature so demands and where the legitimate expectations of those concerned are duly respected Tha: is particularly so in the case of monetārs compensator. amounts the scheme of which implies thai the measure provided tor ma\appiv for a short period to situations which have occurred prior telhe entry into lorce ol the instrument laying down those measures ici. decisions of the Court in Cases 74/74 Comptoir Saitonal Technique Agncole v Commiiiion [1976] ECR 797, 7/76 IRCA v Amministrazione delle finanze dello Stato [1976] ECR 1213, 111/63 Lemmerz-Werke v High Authonty [1965] ECR 677 and 98/78 Račke v Hauptzollamt Mainz [1979] ECR 69). However, although the Court, according to the applicant, had never had to pronounce upon the lawfulness of true retroactivity, its judgments in Cases 100/63 Kalibeek v Sociale Verzekeringsbank [1964] ECR 565 and 88/76 Société pour l'Exportation des Sucres SA v Commission [1977] ECR 709 might allow the conclusion to be drawn that the general rule is to preclude Community regulations from having retroactive effect. Moreover, the applicant considers that the fact that the Court has recognized retroactivity in the sphere of monetary compensatory amounts does not amount to an acknowledgement of the lawfulness of retroactivity in general, in view of the fact that the retroactive effect conferred, for a short period, on the regulations relating to monetary compensatory amounts is indispensable to the whole system of that machinery. As such, that effect might thus be described as a “false exception” to the principle of the non-retroactivity of Community measures.(b) The national legal systems of the Member States of the Community for their part “unanimously embody” the prohibition of retroactively imposing charges on citizens.That is particularly the case with the German legai svstem wnere, according to the well-established authority of the Bundesverfassungsgericht [Federal Constitutional Counj. laws which impose obligations retroactively are “incompaiiblr ai:h :hr requirements of the rule of la ”. although tne principle of the non retroactivas o: lecivianon is not tormallv laid down ir. the German Basic Law. The case-law ot tne Bunsevfassungsgenchi clearlv demonstrates ihat legislation may be retroactive onu a nere the legitimate expectation o: tnr citizen has beenprotected. In that connection it is not sufficient that draft legislation has been made public; according to that case-law, there must necessarily be a decision of the legislature, that is to say a vote by the Bundesug [Lower House] in favour of the adoption of a retroactive law. Moreover, the Bundesverfassungsgericht has “particularly insisted” on the need to safeguard the principle that fiscal legislation may not be retroactive. According to the applicant, contested Regulation No 387/81 comes close to being a fiscal law since it introduces a production levy on isoglucose which is “parafiscal” in nature.The Bundesverfassungsgericht certainly allows a number of exceptions to the principle that legislation may not be retroactive^note but in the present case none of those exceptions may be relied upon to sanction the flagrant breach by the Council of the principle that legislation may not be retroactive. In any event it cannot be denied that respect for the principle that legislation imposing charges may not be retroactive is ensured with “exceptional vigilance” by the Bundesverfassungsgericht.Apan from Norway where Article 97 of the Constitution expressly prohibits the retroactivity of laws in civil matters, the legal systems of other countries in Europe admit of the principle that legislation may noi be retroactive only in an attenuated form in the sense that, in the absence of a constitutional court, the courts are powerless to combat the retroactivity of legislation. Consequently, save in fiscal matters where the principle that legislation mav not be retroactive is sacrosanct, legislation is permitted to have retroactive effen where the will of the legislature to that effect is clearly expressed. On the other hand the courts and tribunals are particularly vigilant against the retroactivii)' of orders and regulations, save in the case of express legislative authorization.On that point the applicant concludes that, in the absence of effective parliamentary control over the legislative or “quasi-legislative” activities of the Council it is particularly important that the Court's power of review be exercised in the widest possible manner. For that reason the applicant considers that the Court, by virtue of its judgment in Case 4/73 Nold v Commission [1974] ECR 491, in exercising that review, is bound to draw inspiration from the constitutional traditions common to the Member States and to “apply the maximum standard of protection recognized by national constitutional laws”.In that respect the applicant observes that the Treaty, by instituting two specific rights of action, namely the action for failure to act under Article 175 and proceedings for nullity under Article 173 the Treaty did not wish to assimilate the Council to a “legislature”. The right enjoyed by those concerned directly to challenge the legislative activity of the Community is intended to compensate for the inadequacy of a parliamentary review of the Council's activities and confirms the need to subject the Council to a degree of judicial review which is as wide as that exercised at national level over the exercise of the power to issue regulations.(c) The applicant then considers the arguments in favour of considering the retroactivity of Regulation No 3S7/81 to be lawful. It concludes that those arguments must be reiected.First it cannot be said that the retroactivity of Regulation No 387/81 is justified by overriding considerations of public interest requiring the legal vacuum resulting from the nullity of Regulation No 1293/79 to be filled. In fact that legal vacuum had no harmful effect on the Community public interest since Regulation No 1293/79 remained applicable until its nullity was pronounced by the Court. The objective pursued by the regulation, namely a restriction of the production of isoglucose in the Community, was therefore achieved. In that respect the applicant states that the reimbursement of levies already paid would not alter the conditions of competition as between sugar producers and isoglucose producers. The applicant's production capacity which had already been restricted by the quotas mandatorily fixed by the Council, could only be increased by the introduction of new production investment. No such project is however envisaged since the production capacity has already been increased by a better utilization of the existing plant and an increase in performance resulting from a modification to the manufacturing process.Furthermore, the applicants find u difficult to understand that the public interesi requires the Council to give retroactive effect to Regulation No 3S7/81 whilst that possibility was not envisaged bv the Council when it adopted Regulation No 1293/79 succeeding Regulation No 1111/77 which had been declared invalid b\the Court At the very least it is excessne to maintain, as doc the Council, mat if Regulation No 3S7/SI acre no: to be retroactive the legaluv ot me rules governing isoglucose production would be undermined and the Council tor that reason would no longer ha\e available to it the data which it needs for reference purposes such as the production quotas of previous years. In fact, it falls within the discretionary powers which the Court has recognized the Council as enjoying in the management of the common agricultural policy to be able to reassemble those data.In the same way, it is wrong to maintain, as do the Council and Commission, that reimbursement of the levy already paid would lead to an unjustified enrichment of isoglucose producers and, by the same token, an increase in the charges imposed on sugar producers. The applicant states that, in the context of an action for nullity, such considerations are immaterial; for its action to be admissible it is sufficient if the applicant can show a legal interest and, for the measure to be declared void, it is sufficient if the measure reveals defects of such a nature as to call in question its validity. On the other hand, the applicant points out that reimbursement of the levies as a result of nullity would no doubt not be sufficient to cover the losses incurred by reason of the contested regulations. In that connection it puts forward figures which show that reimbursement of levies received following the nullitv of Regulation No 1111/77 (Cases 1C3 and 145/77) did not compensate it for the damage which it suffered from the application of that regulation. It was unable to obtain compensation for that damage since the action which it brought in Case 116/77 was dismissed (judgment ot' 3 December 1979).Finally it is also wrong to claim that reimoursement oí me levy paid would increase the share ot the levy imposed on sugar producers By virtue of Article 27 í3i ot Regulation No 3332/74 of the Council of 19 December 1974 (Official Journal L 359, p. 1) the B sugar levy could not in any event exceed 30% of the intervention price, or, for the marketing year 1979/80 in question, 12.33 European currency units (ECU) per 100 kg. Since the levy for that period was fixed bv Article 1 of Council Regulation No 3103/80 of 28 November 1980 (Official Journal L 324, p. 62) at 12.3 ECU per 10C kg, an increase in the latter would be impossible given that the principle of coresponsibility, which enables the B sugar levy to be increased in respect of the following year where the levy for the year in progress is insufficient to cover the losses incurred, was onlv introduced with effect from 1 July 1981 bv Article 28 (3), (4) and (5) of Council Regulation No 1785/81 of 30 June 1981 (Official Journal L 177, p. 4).On the other hand, it cannot be said that compliance with the judgment of the Court declaring Regulation No 1293/79 void required the Council to make Regulation No 387/81 retroactive. Regulation No 1293/79 was indeed declared void on a ground of external illegality which did not affect the Council's ability to readopt the substance of the regulation declared void. No inference may, however, be drawn from the ludgment of the Court that the new regulation was to have retroactive effect.Finally it is wrong io take the view at tne retroactive effect conferred on Regulation No 387/81 did not frustrate the legitimate expec:.::ion of isoplucosrproducmg undertakings To accept that traders in that sector were warned. by the existence of Regulation No 1293/79. of the legislature's intention to institute a svstem of quotas and levies in respect ofthe period prior to the entry into force of Regulation No 387/81 would be contrary to the very principle of declarations of nullity by the Court. A declaration by the Court of the nullity of a measure has precisely the effect, under the first paragraph of Article 174 of the EEC Treaty, of rendering the contested measure “void”; the contested measure could not therefore have had the effect of a warning to the applicants as regards their legitimate expectation.Furthermore, the existence of Regulation No 1293/79 was not in itself a factor of such a nature as to alert traders to the retroactive adoption of a new regulation, any more than was the publication on 20 December 1980 — that is to say several months after expiry of the 1979/80 marketing year — of a proposal by the Commission nowhere indicating, according to the applicant's analysis, the legislature's intention to adopt a regulation having retroactive effect. On the contrary, the legitimate expectation of the traders was bolstered by the fact that the Council did not intend to confer retroactive effect on Regulation No 1293/79 even though that was, according to the Council itself, legally conceivable.(d) On the contran, it must be stated that, by arrogating to itself the power to make Regulation No 387/81 retroactive, the Council gravely disregarded the authoritv of the European Parliament and the Court of Justice.BY readopting, with retroactive effect, a measure identical to the one declared void for failure to consult the Parliament, the Council is reducing the duty of consultation laid down in Article 43 (2) of the EEC Treaty to the status of a secondary formality and thus fails to respect the role of the Parliament, as provided for in particular in Article 137 of the EEC Treat), in the institutional equilibrium of the Community. In the same way, the Council cannot rely on the agreement of the Parliament to confer retroactive effect without acknowledging that the Parliament has “a right of veto incompatible with the purely consultative nature of its participation in the Community legislative process”.The Council could not, in the present case, adopt retroactive legislation without infringing the second paragraph of Article 174 of the Treaty according to which it is for the Court to determine the temporal consequences of its judgment of nullity. Since the Court, in declaring Regulation No 1293/79 void, did not make use of that power the Council could not revive, by means of Regulation No 387/81, the system laid down by Regulation No 1293/79, in respect of which the declaration of nullity by the Court meant that it was deemed never to have existed.In that respect it is no: possible to put forward, as the Council, not witnout some contradictions attempts to do, arguments as to the nature of the measure declared void bv the Court, as to nether it is an individual or general measure, or as to whether the authority responsible tor the measure is a legisiatue or administrative one. in order to seek io limit the effects ot the decision orearme Recuiation No l293/79 void Ir.ic: Commumiv lau, in me same wav as national laws, embodies the principie of lhe prohibition of the retroactive application at measures imposing cnarges on emmens and requires the authors of the measure declared void not to readopt the same regulation with retroactive effect.This must be particularly so in the fiscal sphere and it cannot be maintained that the assignation of a revenue receipt or the objective pursued by its author alters its fiscal character which stems from the rules laid down for its charging. In the present case the isoglucose production levy was charged compulsorily and its objective — distributive justice or pursuit of an objective of economic policy — does not alter its mandator) nature as regards those subjected to it.In the applicant's view, the decision to make Regulation No 387/81 retroactive was thus taken merely on the basis of considerations of political expediency without the legislature's concerning itself with respect for fundamental rights and the legal certainty of the traders concerned. Such an attitude has the effect of removing all efficacy from the judgments of nullity given by the Court, creates a situation of permanent legal uncertainty and confers on the Council, in defiance of the law, a discretionary power to decide whether to confer retroactivity on measures adopted by it, whenever a measure, which has been declared void, has existed in that sphere.