Contents
In Case 114/81Tunnel Refineries Limited, a company incorporated under English law, having its registered office at Thames Bank House, Greenwich, London SE 10 OPA, represented by Francis Jacobs of the Middle Temple, barrister, instructed by Graham Child, solicitor, of Messrs Slaughter & May, 35 Basinghall Street, London EC2V 5DB, with an address for service in Luxembourg at the Chambers of Messrs Elvinger & Hoss, 15 Còte d'Eich,vCouncil of the European Communities, represented by Daniel Vignes, Director of the Legal Department of the Council of the European Communities, assisted by Arthur Bräutigam, administrator in that department, with an address for service in Luxembourg at the office of H. J. Pabbruwe, Director of Legal Affairs at the European Investment Bank, 100, Boulevard Konrad-Adenauer,Commission of the European Communities, represented by its Legal Adviser, R. Wainwright, assisted by F. Lamoureux, a member of its Legal Department, with an address for service in Luxembourg at the office of O. Montalto, a member of its Legal Department, Jean Monnet Building, Kirchberg,intervener,THE COURT (Second Chamber)composed of: O. Due, President of Chamber, A. Chloros and F. Grėvisse, Judges,Advocate General: G. ReischlRegistrar: H. A. Rühi, Principal Administratorgives the following
Judgment
Facts and Issues
The facts of the case, the course of the procedure and the conclusions, submissions and arguments of the parties may be summarized as follows:
I —Facts and written procedure
A —Background to the dispute
1.By a preliminary ruling of 25 October 1978 given in Joined Cases 103 and 145/77 Royal Scholten-Honig (Holdings) Limited v Intervention Board for Agricultural Produce; Tunnel Refineries Limited v Intervention Board for Agricultural Produce [1978] ECR 2037 the Court of Justice held that Council Regulation No 1111/77 of 17 May 1977 laying down common provisions for isoglucose was invalid to the extent to which Articles 8 and 9 thereof imposed a production lew on isoglucose of fue units of account per ICC kg of dn matter for the period corresponding to the sugar marketing year 1977/7S The Court stated, in fact, that the svstem established bv the abovementioned provisions offended against the penerai principle of equalitv (in that case as between sugar producers and isoglucose producers). The Court added. however that the ruling left the Council tree to take any necessars measures compatible uith Communitv lau for ensunnp the proper functioning of the market in sweeteners.
2.Following that judgment, on 25 June 1979 the Council adopted, on the basis of a proposal for a regulation drawn up bv the Commission, Regulation No 1293/79 (Official Journal L 162, p. 10, with corrigendum in Official Journal L 176. p. 37) amending Regulation No 1111/77. That regulation entered into force, pursuant to Article 5 thereof, on 1 July 1979.
3.Regulation No 1293/79 amended Regulation No 1111/77 in the light of the judgment of the Court of Justice of 25 October 1978. In view of the fact that the most appropriate means for avoiding inequality of treatment was to subject isoglucose production to rules analogous to those applving to sugar production until 30 june 1980, Regulation No 1293/79 introduced inter alia for the same period a temporary system of isoglucose production (cf. sixth recital). The seventh recital lustifies the rules for allocating and fixing the quotas. The eighth recuai states that u is necessaņ to fu a specific amount of the production lew applicable to itoglucose production.The various statements made in those restults are given practical effect in the system provided tor in Article 3 of the regulation whereby after Article 7 of Regulation No 1111/77, is inserted Title II entitled “Quota arrangements”.Article 4 of the regulation provides that Annex II hereunder shall be added to Regulation No 1111/77:“ANNEX IIUndertaking | Address of registered office | Basic quota in tonnes expressed as dry matterMaizena GmbH | 2000 Hamburg 1,Postfach 1000 | 28000Amylum SA | 49. Rue de l'Intendant,1020 Bruxelles | 56667SA Roquettes Frères | 17, Boulevard Vauban,59000 Lille | 15887SPAD | 15063 Cassano Spinola,Alessandria,Casella Postale 1 | 5863Fabbriche Riunite AmidoGlucosio Destrina SpA | Piazza Erculea 9,Milano | 10706Tunnel Refineries Ltd | Thames Bank House,Greenwich,London SE10 0PA | 21696
4.By separate judgments of 29 October 1980 delivered in Case 138/79 SA Roquette Frères v Council of the European Communities [1980] ECR 3333 and Case 139/79 Maizena GmbH v Council of the European Communities [1980] ECR 3393. the Court declared Regulation No 1293/79 to be void for infringement of essential procedural requirements on the ground that the regulation had been adopted on 25 June 1973 in the absence of the Parliament's opinion required by Article 43 of the Treatv, on the proposal which had been referred to the Parliament on 19 March 1979 However, in the statement of the grounds upon which the judgment was based, the Court reiected all the substantive arguments adduced against the svsiem of production quotas introduced by that regulation and in particular against the basic quotas fixed for the applicants in the two cases
5By Council Regulation (EEC) No 1592/82 of 24 June 1982 (Official Journal L 160, p. 12), which was adopted while Cases 138/79 and 139/79 were pending before the Court, the Council declared that the system of production quotas for isoglucose as laid down by Article 9 of Regulation No 1111/77 (as amended by Regulation No 1293/79) was to apply during the period from 1 July 1980 to 30 June 1981.
6By an application, which was lodged at the Court Registry on 21 August 1980. Roquette Frères, a company incorporated under French law, which manufactures amongst other products isoglucose in its factors at Lestrem (Pas de Calais), requested the Court to “declare invalid” as against it Article 2 or and Annex II to Council Regulation (EEC) No 1592/8: of 24 June 1980 on the application of the svsiem of production quotas in the sugar and isoglucose sectors during the period from 1 July 1980 to 30 June 1981.
7.A similar action was brought on 5 August 1980 against those provisions by Maizena, a company incorporated under German law.
8.Those cases were registered at the Court under Nos 179/80, Roquette v Council and 176/80 for Maizena v Council
9.On 10 January 1981, that is to sav while Cases 176 and 179/80 were pending before the Court, the Council, after obtaining the opinion of the European Parliament which was delivered on 9 February 1981. adopted the following two regulations.(a) Regulation (EEC) No 387/81 (Official Journal L 44, p. 1) amending Regulation No 1111/77 laying down common provisions for isoglucose. By means of a reference to the provisions of Regulation No 1111/77 that regulation reinstates inter alia the system of production quotas with retroactive effect to 1 July 1979;(b) Regulation (EEC) No 388/81 (Official Journal L 44, p. 4) amending Regulation No 1592/80. According to the second recital in the preamble to that regulation it was adopted “in order to avoid any doubts as to the legalty of ... Regulation No 1592/80” Article 1 of Regulation No 388/81 amends Article 2 of Regulation No 1592/80 which refers in its turn to Article 9 of Regulation No 1111/77 The object of that amendment was to extend the system of isoglucose production quotas to the marketing year 1980/81. Under the terms of Article 2 thereof Regulation No 388/81 is to apply from 1 July 1982
10By order of 2 April 1981 the Court took note that Maizena GmbH wished to withdraw its action in Case 176/80 and ordered the case to be removed from the Court Register.
11.Case 179/80 is, however, still pending before the Court.
B —Procedure
1.By an application lodged at the Coun Registery on 11 May 1981 Tunnel Refineries Limited requested the Coun to annul Council Regulation (EEC) No 387/81.
2.In its defence dated 2 July 1981 the Council maintained that the application was unfounded.
3.The applicant lodged its reply at the Coun Registry on 11 September 1981.
4.By an application received at the Coun Registry on 29 July 1981 the Commission requested the Coun to allow it to intervene in suppon of the Council.By order of 30 September 1981 the Coun, on hearing the views of the Advocate General, decided to accede to the Commission's request to intervene.By intervention received at the Coun Registry on 17 November 1981 the Commission maintained that the Council's position was well-founded.
5The Council of the European Communities lodged its reminder on 16 October 1981
6The applicant lodged its answer to the intervention of the Commission on 14 January 1982;
7.On hearing the repon of the Judge-Rapporteur and the views of the Advocate General the Court decided to open the oral procedure without any preparatory inquiry.
8.By an order of 24 March 1982 the Court, having heard the views of the Advocate General, decided, pursuant to Article 95 (1) and (2) of the Rules of Procedure, to assign the case to the Second Chamber.
II —Conclusions of the parties
1.By an originating application Tunnel Refineries Ltd claimed that the Court should:(a) annul Regulation No 387/81;(b) in the alternative, annul Article 1 (3) and (4) of Regulation No 387/81;(c) in any event, order the defendant to pay the costs.
2.In its defence the Council of the European Communities contends that the Court should dismiss as unfounded the application for annulment made by the applicant and order the applicant to pay the costs
3.In its intervention the Commission supports the conclusions ol the Council seeking(a) the dismissal ol the application for annulment.(b) an order that the applicant should pji the costs
4In its reply the applicant maintains its conclusions
5.In its rejoinder the Council of the European Communities maintains the conclusions which it presented in its defence.
6.In its answer to the intervention of the Commission the applicant maintains its conclusions.
III —Submissions and arguments of the parties
First submission: breach of the general principle that legislation may not be retroactive
1.Tunnel Refineries Limited states that the case-law of the Court clearly demonstrates that retrospective legislation is in principle not permissible in Community law, and that, even on grounds of necessity, it may be recognized only with very limited effect.(a) According to the applicant the Court has never been required to give a ruling on the legality of “truly” retroactive legislation. It is possible however to deduce from decided cases relating to the date of entry into force of regulations that the Court, on the one hand, has sought to give a narrow definition to retroactivity by declining to apply that concept to situations where the immediate application of the law to a preexisting and continuing situation was at issue and, on the other hand, that the Court has accepted the retroactivity of Community measures only where that is required by an overriding necessity to protect a general Community interest. In any event those cases, decided in the context of disputes relating to the application ratione temporis of economic measures, such as monetarv compensatory amounts or national protective measures adopted in order to combat monetary fluctuations and the like, involved merely a very limited retroactive effect of a few days, frequently made necessary by the very nature of the factors in question (monetary measures) and concerning cases not at all comparable to the present case where the retroactive effect relates to several years.In conclusion on that point the applicant relies on the judgments of the Court in Joined Cases 42 and 49/59 SNUPATv High Authority [1961] ECR 53, Case 88/76 Exportations des Sucres v Commission [1977] ECR 709 and Case 98/78 Račke [1979] ECR 69 to demonstrate that the Court has laid down a principle prohibiting retroactivity in Community law where the retroactivity envisaged runs counter to the principles of legal certainty and legality. In the applicant's view this is just such a case where the Council seeks to reenact with retroactive effect a measure which has been declared illegal by the Court.(b) In the present case the applicant maintains that the Council has not sought to establish the necessity for giving retroactive effect to the contested regulation.The applicant conceives the reasoning put forward by the Council and the intervener as seeking to argue that retroactive legislation is lustified provided two conditions are satisfied, namely respect for legitimate expectation on the one hand and overriding considerations of public interest on the other.With regard to the argument as to the absence of any legitimate expectation requiring protection, the applicant submits that that thesis is based on a fundamental misconception in the sense that the concept of legitimate expectation has no place in the present case. The principle of the protection of legitimate expectation operates as a brake imposed by the Court on the freedom of action of the legislature in order to protect the individual against the future consequences of legislation which, if applied immediately to transactions entered into previously, would have the effect of disturbing the expectation that the legal regime existing previously would not be altered abruptly. The applicant is therefore of the opinion that the principle of the protection of legitimate expectation is merely an application of the general principle of law that legislation may only govern the future consequences of transactions already entered into. The very concept of legitimate expectation is thus at odds with the concept of retroactivity.The principle of the protection of legitimate expectation cannot of itself render lawful legislation which is prima facie unlawful on account of the general prohibition laid down by Community law of retroactive legislation. For that reason the applicant concludes that the pnnciple of the protection of legitimate expectation “has no bearing whatever on retroactive legislation”.In that respivt ind in reply to the arguments of the Commission the applicant states that in fact it had no legitimate expectation thai the production levies paid pursuant to Regulation No 1293/79 would be reimbursed. On the contrary it takes the view that, once the Court had declared that regulation void by us ludgmeni in Cases 138 and 139/79, it had not merely a legitimate expectation, but a right to the reimbursement of the levies paid pursuant to that unlawful regulation and that for the same reason it had no reason to suppose that the system of levies declared unlawful by the Court would be re-imposed on it retroactively.As to the argument regarding necessity arising out of overriding considerations of public interest the applicant maintains that it is unfounded. In fact the retroactive effect given to Regulation No 387/81 is merely intended, according to the applicant, to make the isoglucose levy payable in respect of the marketing year 1979/80. Since the levy was annulled by the Court in Cases 138 and 139/79, that regulation thus has the effect of re-imposing the levy. That no longer has any purpose since the objective pursued by the imposition of that lew, namely to restrict isoglucose production, has clearly been achieved. If it had not been achieved the applicant further sutes that to impose the levy retroactively would not have any effect on the volume of production already achieved.The applicant then seu out to refute another argument advanced bv the Council and me Commission to the effect tha; tne romriurvement or the levs aouid atiorű isogiuvove producers an unexpecteű anj undue Imančiai advantage On trut point it stairs that tnr onlv txnrtit "nich itogiucose producen "Ί! retrive as a rrs":t oł the declaration that Regulation No '"•*'> I is void, lust a" p'rviou"'" •" trsr cave o* Regulation No l."*> ""v "ill r"e that ot no longer bring \ut>ircted to an unlawful regime Tha' hrrrtu ma" noi. ho" ever, according to the appuvan·. Tónimmé anargument against a declaration that an unlawful regime is void. In that respect the Commission's argument that reimbursement of the levy is dependent on the condition that the claimant has suffered damage is irrelevant. The applicant asserts that Community law, as elucidated by the case-law of the Court, relies for the determination of such matters on the laws of the Member States. Only the laws of Italy and Denmark lay down a condition similar to that put forward by the Commission. Under English law and in other legal systems too, the principle of unjust enrichment lays down that a person who has obtained a benefit from another, not intended as a gift and not legally justifiable, must make restitution to the other party. In the present case the applicant considers that it is not the manufacturers but the Community which has unjustly enriched itself by withholding the revenue arising from a levy paid pursuant to a regulation declared invalid.Finally, the applicant disputes that the discrimination, which it is alleged sugar producers would suffer if the contested levy were to be reimbursed, is of such a nature as to justify the retroactive imposition of the isoglucose production levy. The Community is first and foremost required to respect the principle of legality and mav not maintain in force an unlawful regulation on the ground that not to do so would entail a further illegality.For those reasons the applicant concludes on that point that the Council has not succeeded in satisfactorily snowing that the retroactive effect given to Regulation No 387/81 is justified by the need to protect an overriding public interest.(c) Furthermore, the retroactive effect sought by the Council is in fact contrary to Community law in two ways inasmuch as it is in defiance of the judgment of the Court of Justice and in disregard of the requirement of consultation with the European Parliament provided for by the Treaty.In Cases 138 and 139/79 the Court deliberately refrained from availing itself of the possibility of limiting under the second paragraph of Article 174 of the Treaty the temporal effects of Regulation No 1293/79, which it had declared void, although the Commission in its intervention and the Advocate General in his opinion urged the Court so to do. It must be concluded that the Court intended that Regulation No 1293/79 should be declared void ab initio.In that connection the applicant finds that the Council is drawing a distinction between the effects of nullity on procedural grounds and those of nulliry on substantive grounds. The applicant takes the view that there is nothing in Article 173 of the EEC Treatv to support the drawing of such a distinction or ot the conclusion that the effects of nullitv depend on the ground on which nullitv was pronounced. The ground on which a measure is declared void is legahv irrelevant and u cannot be asserted that an annulment for infringement ot a procedural requirement permits the author ot the annulled measure to readopt retroactively the measures touno soiJIn seeking, by means of Regulation No 387/81, to readopt a regulation identical to the annulled regulation and by giving it retroactive effect, the Council has thus sought “to obviate the effects” of the nulliry of Regulation No 1293/79. Such a procedure, apart from the fact that it overlooks the mandatory nature of the requirement of prior consultation with the European Parliament, deprives those affected by the retroactive measure of a ground of action for challenging it, namely an action based on an actual infringement of an essential procedural requirement. That consequence is all the more serious since the European Parliament has no right of action under Article 173 of the Treaty and thus there is no wav in which the requirement of consultation may be enforced by the Court. If that were so it follows that the Community legislature could with impunity ignore procedural requirements applying to its measures.In the present case it certainly cannot be denied that Parliament was formally consulted. However, by giving Regulation No 387/81 retroactive effect the Council “sought to overcome its failure properly to consult the Parliament when Regulation No 1293/79 was adopted” and thus did not observe the requirement of consultation. If it is to be effective and consistent with the democratic process, consultation must take place before the entrs into lorce of the legislation on wmch the Parliament is required to give its opinion. If the conferring of retroactive effect in the present case were held to be lawful, then the requirement of consultatior, woud be reduced to an empty tormants and would allow the Council to disregard that procedure de not Jr /ut
2The Council of the European Communities the defendant, considers to its part that case-law of the Court clearly demonstrates, in particular in its judgment in Case 98/78 Racke [1979] ECR 69 at paragraph 20 that retroactive Community measures are by no means excluded as a matter of principle. However, the Court has sought to make retroactive Community measures subject to judicial review to ensure that they observe in particular the following conditions:(a) First, the protection of legitimate expectation on the part of those concerned where such expectation is present,(b) Secondly, the retroactivity of the legislation must be necessary so as to satisfy the aim pursued by the legislation in question or to meet a need of overriding general interest.The Council considers that these conditions as defined have been observed in the present case.(a) There can be no legitimate expectation ón the pan of the applicants in view of the circumstances in which Regulation No 1293/79 was declared void and in the light of the consistent approach of the Community institutions in this matter.In fact, isoglucose producers had known since 17 May 1977, the date of minimo force of Regulation No 1111/77, of the Community's intention to adopt restrictive measures with regard to the production of isoglucose. That intention has since then been leads confirmed by legislative activities u; Regutations Nos 1111/77, 1293/79, and in the attitude adopted by the Communitis institution. The existence of illegitimate on the part of isoglucose producers of the regulations reumi;; to isoglucose would thus only be conceivable if the Court had condemned that policy in principle. The judgment declaring Regulation No 1111/77 to be void was restricted to condemning the method of calculating the isoglucose production levy and not the principle of the lesy. In that context it was thus conceivable, from a legal point of view, that the Council might amend Regulation No 1111/77 with retroactive effect. For “reasons of advisability from the point of view of policy” the Council declined to adopt that solution and adopted instead Regulation No 1293/79 whose substantive conformity with Community law was clearly upheld by the Court in its judgment in Joined Cases 138 and 139/80. Indeed, by that decision the Court, it is true, annulled Regulation No 1293/79 for infringement of essential procedural requirements but rejected all the substantive complaints alleged by the applicants against the principle of a levy imposed on the production of isoglucose. The legality of the principle and the procedural steps taken by the Council were thus consistently confirmed and the Council was therefore entitled to reintroduce the disputed levy with retroactive effect to the marketing year 1979/80.In the Council's view, the contested measures are of a “mixed” nature inasmuch as they contain legislative provisions of general application, such as the laying down of abstract criteria for organizing production and allocating quotas, and provisions which may be considered to be individual decisions such as provisions allocating production quotas to each manufacturer in the Community.The “mixed” nature of the contested regulations explains why the Court did not seek to limn the temporal effects of its declaration that, on the ground of infringement of essential procedural requirements, Regulation No 1293/79 was void. Indeed it is clear from the terms of Article 174 of the EEC Treaty that that possibility is confined merely to purely legislative measures. The Court was thus not able to apply that provision to declare its consent to the maintenance in force of Regulation No 1293/79. However, the rejection by the Court of all the substantive allegations made by the applicants in Cases 138 and 139/80 is sufficient to support the Council's view that its action was not in itself reprehensible and that the charging of levies was lawful in principle as from the marketing year 1979/80. In that connection it should be recalled that the Court held, in its judgment in Case 101/78 Granaria [1979] ECR 623 that regulations are to be applied as long as the Court of Justice has not taken a decision with regard either to their legality (Article 173 of the Treaty) or their validity (Article 177 of the Treaty). Thus Regulations Nos 1293/79 and 1592/80 were to be given full effect including as regards the charging of the levy until the delivery in October 1980 of the judgment declaring them to be invalid.In those conditions the Council considers that neither de facto nor de jure was there any legitimate expectation worthy of protection. In its ludgment in Cases 138 and 139/80 the Court not only reiected all the substantive allegations made against the measures adopted by the Council but u also added that those measures were fully justified during the marketing year 1979/80 and invited the Council to take all appropriate measures in the isoglucose sector. For that reason the Council takes the view that it cannot be claimed that it has failed in its duty to comply with the judgment of the Court within the meaning of Article 176 of the EEC Treaty.In the Council's view, the obligations resulting from a judgment that a measure is void are to be construed in conjunction with the ground upon which the nullity was pronounced. In the present case the Council's duty was, in the actual terms of the judgment declaring Regulation No 1293/79 void, to observe the Parliament's right to be consulted in the matter. The latter, by its resolution of 9 February 1981, gave a favourable opinion on the Commission's proposal of 20 December 1980. The fact that that opinion was given on the dav before the adoption by the Council of Regulations Nos 387 and 388/81 of 10 February 1981 is not, as the applicant asserts, of such a nature as to call in question the validity of that consultation. In fact, the rapid means of communication existing between Community institutions enabled the Council to take full account of the Parliament's opinion particularly since that opinion did not seek to amend the existing draft of the regulation.The Council therefore did not fail to comply with its duty under Article 176 of the EEC Treaty and cannot be accused of having frustrated a legitimate expectation which was entirely nonexistent since those concerned, who as prudent traders were fully informed of the Community's action in the isoglucose sector, had been warned both in law and in fact of the unequivocal intention of the institutions to pursue their poliev of regulating the sector in question. In particular, the attitude ot the legislature had been made abundantly clear bv the publication on 20 December 1980 (Official Journal C 334, p. 2) of the Commission's proposal drawing the consequences of the judgment declaring Regulation No 1293/79 void, whereby the Commission declared itself to be in favour of the adoption, with retroactive effect, of the measures adopted by the Council in the form of Regulations Nos 387 and 388/81.For all those reasons the Council considers that it has not defied the authority of the Court or the powers of the Parliament. In that connection the Council seeks to emphasize the exceptional circumstances in which Regulation No 1293/79 was adopted. Owing to the urgency brought about as much by the necessity to comply with the judgment of the Court declaring Regulation No 1111/77 to be void as by the factual situation thus brought about which meant that sugar producers were subjected to a system of levies whilst isoglucose producers thus were exempted from such a system, the Council was compelled, having regard to the delay, which was also exceptional, occasioned by the Parliament in giving its opinion, to adopt Regulation No 1293/79 in the absence of that opinion. The Council, however, observes that its dignity as the Community legislature, its desire to respect the Treaties and also the Commission's power, as guardian of those Treaties, to ensure compliance with the law are all of such a nature as to ensure the proper functioning of the legislative machinery of the Communities. The Council adds, moreover, that tne circumstances in which Regulations Nos 387 and 388/81 were adopted and the procedure initiated for the adoption of proposals required to supersede those regulations bear witness to the Council's respect for Parlament's right to be consulted(b) Secondly, the Council seeks to demonstrate that there is a general overriding interest, of such a nature as to take precedence over the pecuniary interests of the applicants, justifying a retroactive confirmation of the charging of levies laid down by Regulations Nos 1293/79 and 1592/80.If the retroactive effect of the regulations in question were to be adjudged unlawful the Council argues that not only would the legality of the levies already charged be nullified but that illegality would affect the whole system for regulating the production of isoglucose. Such a solution would have the effect of requiring the Community to reimburse the levies charged which would result in affording isoglucose producers an unexpected and undue financial advantage which would discriminate against competing sugar producers and would enable isoglucose producers unilaterally to strengthen their competive position. The result would be in the end contrary to the requirements of the common agricultural policy and in particular to Article 39 of the Treaty which, as the Court has emphasized, imposes limits on the freedom of action of institutions with regard to restrictive measures concerning the sugar industry.(c) Lastly, the Council seeks to refute the argument that the fiscal or parafiscal nature of the isoglucosc production levy militates against the giving of retroactive effect to the contested provisions. The Council states that, although the levy in question may be equated to a charge, that charge pursues no fiscal objective in the sense that it was not created for the purpose of guaranteeing revenue for the Community but to restrict, in the general interest, the development of isoglucose production. In that connection the Council points out that the revenue from the levy in question is not uniform but depends upon the relationship of the value on the world market of sugar to its value within the Community. In order to finance losses incurred in the exporting of sugar (export refunds) arising from surplus production in the Community of sugar or of isoglucose, the levy is charged only if the production quotas are exceeded owing to the activity of the manufacturers. For that reason the fact that production was indeed restricted during the marketing years 1979 and 1980 owing to the application of Regulations Nos 1293/79 and 1592/80 until October 1980 is immaterial. In fact a reimbursement of the levy, apan from the fact that it would unilaterally alter the competitive situation of isoglucose producers, would have the effect of destroying the system whereby production of isoglucose was restricted in the marketing years 1979 to 1980.
3.The Commission of the European Communities, intervening in support of the Council's conclusions, points out that:(a) the case-law of the Court and the laws of the Member States admit of true exceptions to the principle that legislation should not be retroactive, and(b) the conditions, to which the case-law of the Court makes tnr retroactive effect of Communits provisions subject, were satisfied in the present case.(a) The case-law of the Court nr. particular Joined Cases 42 and SNUPAT v High Authority) by no means rules out the retroactive clicii of Community provisions impoving turpe on individuals That possibility is moreover necessary in a legal system which is called upon to reconcile the general interest with private interests when regulations principally governing economic relationships are implemented.In the Commission's opinion it is wrong to take the view that the Court only sought, in its case-law, to refer to “limited” retroactive effect and not to “true” retroactivity. In particular the opinion of Mr Advocate General Reischl in the Racke case emphasized that the Court in that case had to adjudicate upon a case of “true” retroactivity. At paragraph 20 of its decision in the case the Court clearly confirmed the legality of retroactivity under Community law and defined its limits.(b) The Commission considers that the Council's legislative activity has not in the present case disregarded the conditions imposed by the Court on the retroactivity of Community measures.(i) First, there was no interference with the legitimate expectation of the parties concerned since they cannot satisfactorily show the existence of an established right or a legitimate expectation of reimbursement of the levies paid or that the retroactive measure in question was unforeseeable.With regard to the established right claimed to the reimbursement of the levies in question as a consequence of the annulment of Regulation No 1293/79 the Commission points out that the judgments of the Court of 29 October 1980 could not have the effect of lonterring such a right since the declaration that was void was merely dur to the inding of a formal irreguij and not a substantive defectThe applicant is :nuv confusing two quite ciiijur of action available in applications based on illegality, namely external legality and internal legality. The cause of action relating to internal legality was definitively adjudicated upon by the Court when it examined the substantive allegations made in Cases 138 and 139/79.The declaration by the Court that Regulation No 1293/79 was invalid in law cannot therefore be equated to a declaration that the contested measure was void ab initio. Following the consistent case-law of the Court, as illustrated by the judgment in Case 101/78 Granaria [1979] ECR 623, that measure was effective until the date of the judgment declaring it void. In those circumstances the legitimate expectation of the manufacturers could not have been frustrated. As a result isoglucose producers could only rely on established rights to a possible reimbursement if the internal legality of the measure had been called in question by the judgment of the Court. For the same reason producers may not derive from the declaration that Regulation No 1293/79 was void a legitimate expectation to the reimbursement of the levy paid. In any event, even if that expectation did exist the consistent approach of the Community institutions invalidated any such hope and was sufficient to deprive it of any legal significance.The maintenance with retroactive effect w 1 July 1979 ot the disputed lev was moreover perfectK foreseeable for welliniorwed manufacturers such as the applicants, in viea of the grounds upon which the decision oí the Court in Cases 13 and 139/79 was based In fact, in those judgments the Court un equisocalls reiected all the substantive aiiepations and referred. some hat unusuallv. accordine to the Commission, io the possibilità mat the Council might take any “appropriate measures” to regulate the production of isoglucose.The Commission observes that the legal significance of the judgments of 29 October 1980 was confined, according to the very terms of the declaration of nullity, to the fact that the Council had a duty formally to consult the Parliament before adopting measures which were otherwise in conformity with Community law. On the other hand, the question whether or not the provisions concerning isoglucose should be given retroactive effect fell, in the Commission's view, within the scope of the appraisal of the general interest made by the Council subject to review by the Court. Thus regard being had to the fact that, contrary to the first decision of the Court concerning Regulation No 1111/77, neither the principle nor the methods of determining the levy were condemned by the Court, the reference made by the Court to the possibility that the Council might adopt “all appropriate measures” might in the Commission's view, be interpreted as meaning that the measures contained in the regulation, which had been declared void on grounds of external illegality, might be reinstated with retroactive effect.(ii) Secondly, the Commission considers that an overriding general interest justified the giving of retroactive effect to Regulation No 387/81.In fact it is. in the Commission's via, undisputed (cf. paragraph 30 of the ludgment in Cases 13S and 139/79) that the restrictive measures imposed on the production of isoglucose contribute to stabilizing the market in sweeteners within the Community in order to ensure a fair standard of living for producers in accordance with the obiectives of Article 39 of the Treaty. It is also not disputed that that objective of general interest, given the close link by means of which liquid sugar and isoglucose may be substituted for each other, may be achieved only by the combination of provisions relating to sugar and those governing isoglucose. For that reason it is not possible to declare void ab initio the provisions relating to isoglucose without damaging the whole machinery designed to stabilize the sugar market wiihin the Community.Moreover, the reimbursement of the levies already paid under Regulation No 1293/79 would have the effect of breaching the principle of equal treatment as between isoglucose producers and sugar producers and, in the end, would threaten the stability of the market.First, such reimbursement would confer a financial benefit on isoglucose producers which sugar producers would not receive. That would be all the more unfair since, following the preliminary rulings of 25 October 1978, they have already benefited from a “considerable advantage” by not being made subject to the first levy provided for by Regulation No 1111/77. Thai would result in a strengthening of the productive capacity of those producers which already poses a threat to the stabihtv of the market. That stair of affairs would be continued if, in addition, the levies alreadv paid were reimbursed to isoglucose producers. The effect of reimbursement would thus be thai lhe responsibiiitv for the financing of the intervention machinen for the e\pon of sweeteners (refunds, indirect price guarantees and lhe lihei aouid tall solels upon the supar producers * herras boin categories ol manufacturer* isugar producers and isoglucose producersi have benefited trom the operation ol the machinen.Secondly, the Commission points out that the abolition ab initio of the lew, apan from the fact that it would bring about an unjustified enrichment of a category of producers thus permitting them to increase their productive capacity, would free them from all financial responsibility for the disposal of the surplus stemming from the increase in their productive capacity and would thus seriously threaten the proper functioning of the sugar markets.The Commission thus considers that the Council was justified in taking the view that an overriding public interest required, by itself, that retroactive effect be given to the provisions in question.In that connection it cannot be said that such retroactivity robs the procedure for consultation with the Parliament of its raison d'être. Indeed it cannot be disputed in the present case that the Parliament, properly consulted, gave its opinion in full awareness of the retroactive effect conferred by the Council on the measure which it was proposed to adopt. The terms of its resolution of 9 February 1981 (Official Journal No 50, p. 14) are unequivocal on that point. The Parliament was thus able fully to exercise its powers since it was aware of the totality of the provisions submitted for its examination and since by its opinion it approved those measures If that were not the case and on the supposition thai the Council insisted on adopting a regulation in breach of its duty of consultation and that the Commission, “heedless both of its role as guardian of the Treaties and of the risk of crnsurr bv the Parhamrni”. allowed the Council to persist in us stance, the Commission points out thai it would remain open to the applicants to bring a second action before the Court in order to preserve their rights.
Second argument as to a breach of the obligation to state the reasons upon which a measure is based
1.Tunnel Refineries Limited considers that no sufficient or appropriate reasons are given for Regulation No 387/81 as regards the actual principle of the measures laid down in respect of quotas and that generally no reason whatever is shown for the retroactive effect given to the quota system.(a) In the applicant's view the only reason given for Regulation No 387/81 generally is a “patently and fundamentally false” statement that the Court, in its judgments in Cases 138 and 139/79, affirmed that the machinery established by Regulation No 1293/79 was substantively in conformity with Community law. That statement shows a mistaken view of the scope of an action for a declaration of nullity in the course of which the Court is confined to adjudicating upon the allegations made against the disputed provision and may not adjudge whether the provision is substantively in conformity with the law.The applicant asserts, in any event, that reasoning similar to that justifying the adoption of Regulation No 1293/79 was necessary to justify the adoption of Regulation No 387/81. it was not open to the Council to refer to the preamble oí Regulation No 1293/79 to provide the justification for the new regulation since that regulation had been declared void and us statement of reasons is deemed to be legally nonexistent and as such couid not be used to supply the reasons for the new regulation.(b) As to the retroactive effect given by the Council to the main provisions of Regulation No 387/81 the applicant sutes that no reason whatever was given and that, on that ground alone, in accordance with the well-established case-law of the Court (cf. Case 14/61 Hoogovens v High Authority [1962] ECR 253 and Case 24/62 Federal Republic of Germany v Commission [1963] ECR 63) that regulation must be declared void irrespective of any other grounds of illegality put forward.For those reasons, the applicant concludes on that point that Regulation No 387/81 should be annulled for lack of reasoning in general and for lack of reasons justifying its retroactive effect in particular.
(2)The defendant, the Council of the European Communities, considers for its pan that those allegations are unfounded.The Court has repeatedly held that, when a regulation forms part of a set of regulations, the reasons given for that regulation may be found in the statement of reasons given for earlier regulations. In the present case, the Council considers that the reasons for its action are clearly set out in the statement of reasons contained in Regulation No 1111/77 and detailed in that Regulation No 1293/79.As regards the absence of reasons for the necessity of the retroactive effect given to Regulation No 387/81 the Council considers that that necessity is clearly explained by the wording of the last sentence of the second recital which is as follows:“the Court affirmed that the ... regulation was substantively in conformity with Community law; ... it is therefore appropriate to reinstate ... the system of quotas concerned retroactively”.The Council therefore considers that a “reasonably attentive reader” and in that respect it asserts that the applicant is “much more than” a “reasonably attentive” reader having taken part “in the previous isoglucose battles” was easily able to undersund the reasons for the Council's action and its decision to give retroactive effect to the regulation.
3.The Commission of the European Communities considers that the claim relating to a breach of the duty to give the reasons on which a measure is based “does not stand up to a simple reading of the recitals of Regulation No 387/81” and states that it entirely supports the Council's arguments refuting that allegation.
IV —Oral procedure
At the sitting on 1 July 1982 oral argument and observations were submitted by the following: F. Jacobs of the Middle Temple, barrister, instructed by Graham Child, solicitor, of Messrs Slaughter & May, London, for Tunnel Refineries Ltd, D. Vignes, Director of the Legal Department, assisted by A. Bräutigam, administrator in the said department, for the Council of the European Communities and R. Wainwright, Legal Adviser, assisted by F. Lamourcux, a member of the Legal Department, for the Commission of the European Communities.The Advocate General delivered his opinion at the sitting on 23 September 1982.
Decision
1By application lodged at the Court Registry on 11 May 1981 Tunnel Refineries Ltd, a company incorporated under English law, brought an action before the Court under the second paragraph of Article 173 of the EEC Treaty tor a declaration that Council Regulation (EEC) No 387/81 of 10 February 1981 (Official Journal 1981, L 44, p. 1) amending Council Regulation (EEC) No 1111/77 of 17 May 1977 laying down common provisions for isoglucose (Official Journal 1977, L 134, p. 4) is void and, in the alternative, for a declaration that Article 1 (3) and (4) of that regulation, which reinstates in respect of the same period, that is to say with retroactive effect, the system of quotas laid down by Regulation No 1293/79 in respect of the period running from 1 July 1979 to 30 June 1980, is void.
2Council Regulation No 1293/79 of 25 June 1979, which amended the aforementioned Regulation No 1111/77 in particular by inserting in a a new Article 9, was in fact declared void by judgments of the Court of 29 October 1980 in Case 138/79 SA Roquette Frères v Council of the European Communities (1980] ECR 3333 and in Case 139/79 Maizena GmbH v Council of the European Communities [1980] ECR 3393 because it was adopted in the absence of the opinion of the Parliament, required by Article 43 of the Treaty.
3In support of its action the applicant claims in its application first that the contested regulation offends against the principle that Community measures should not have retroactive effect and secondly that the statement of the reasons upon which the measure was based is insufficient.
I —First submission: Breach of the principle that Community measures may not have retroactive effect
4As the Court has already held, in particular in its judgments of 25 January 1979 in Case 98/78 Racke [1979] ECR 69 and Case 99/78 Decker [1979] ECR 101, although in general the principle of legal certainty, as the applicant states, precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected.
5As regards the first of those two conditions it is well to call to mind certain matters of fact or law which are moreover well known to the parties. During the period of application of the contested regulation sugar producers were, in particular, subject to quotas and production levies. Isoglucose is a product which mav be substituted for sugar and is in direct competition with it. Any Communitv decision concerning one of these products necessarily has repercussions on the other. Having regard to that situation, although by judgments of 29 October 1980 ine Court declared Regulation No 1293/79 void tor infringement of an essential procedural requirement, namely the absence of the Parliament's opinion, the Court nevertheless considered that it was a matter tor the Council, in view of the fact that isoglucose production was contributing to an increase in sugar surpluses and that it was open to it to impose restrictive measures on that production, to take such measures in the context of the agricultural poliev as it judged to be useful, regard being had to the similarm and interdependence of the two markets and the specific nature of the isoglucose m'arkei
6If, following the declaration of the nullity of Regulation No 1293/79, the Council had adopted no measure restrictive of isoglucose production — in the present case the reinstatement with effect from 1 July 1979 of the quotas allocated and the levies imposed on the producers — the objective which it was pursuing, namely the stabilization, in the general interest, of the sugar market, could not have been achieved or could only have been achieved to the detriment of sugar producers, who alone would have had to finance the costs of Community surpluses, or even to the detriment of the Community as a whole, whilst isoglucose producers whose production competed with that of sugar undertakings would have escaped all restraints.
7In that situation the Council was lawfully entitled to consider that the objective to be achieved in the general interest, namely the stabilization of the Community market in sweeteners without arbitrary discrimination between traders, required the contested provisions to be retroactive in nature and thus the first of the conditions which the Court lays down for the applicability ratione temporis of a Community measure to a date prior to the date of its publication may be regarded as satisfied.
8To ascertain whether the second of the conditions set out above is also satisfied it is necessary to inquire whether the action of the Council in publishing on 17 February 1981 Regulation No 387/81 has frustrated a legitimate expectation on the pan of the applicants to the effect that the production of isoglucose would not be regulated during the period from 1 July 1979 to 30 June 1980, the period to which that regulation makes applicable Article 9 relating to quotas and production levies on isoglucose which it inserted in Regulation No 1111/77.
9It should first be pointed out that the contested provisions of Regulation No 3S7/8I do not include anv new measures and merelv reproduce the provisions of Council Regulation No 1293/79 declared void by the Court on 29 October 1980.
10In view of the fact that Council Regulation No 1293/79 of 23 June 1979 retained its full effect within the Community legal order until it was declared void, so that the national authorities responsible tor its implementation were required to subject the production of isoglucose to tne restrictive system which it laid down, such a legitimate expectation could only be founded on the unforeseeability of the reinstatement with retroactive effect of the measures contained in Regulation No 1293/79 declared void by the Court.
11In the present case the applicant cannot claim any legitimate expectation worthy of protection, a concept moreover which it wrongly states in its reply has no bearing on whether the retroactive effect of a legislative measure is justified.
12In the first place the traders concerned by the rules in question are limited in number and are reasonably well aware of the interdependence of the markets in liquid sugar and isoglucose, of the situation of the Community market in sweeteners and therefore of the consequences which, following the declaration that Regulation No 1293/79 was void, the imposition on the. production of sugar in respect of the period from 1 July 1979 to 30 June 1980 of stabilitzation measures from which the production of isoglucose would have been entirely exempt might have had.
13Secondly by adopting successively Regulations Nos 1111/77, 1293/79 and 1592/80, the latter regulation extending the effects of the previous one in respect of the period from 1 July 1980 to 30 June 1981 the Council had clearly manifested its intention of regulating the production of all sweeteners in the Community and to that end of subjecting the production of isoglucose to a restrictive svstem based on a system of quota. and production levies.
14Thirdlv it could not have escaped the notice of the applicant that in both judgments of ther Court, of 29 October 1980 which declared void Regulation No 1293/79 which also fixed as own production quota), the Court rejected the grounds which the applicants companies Roquette and Maizena were lontestmp tnr Ņurdamu r of that regulation and was at pains, at the same time as pronouncing it void tor failure to obtain the Parliament's opinion, to state that such nullit was without prejudice to “the Council's power fowoling the present judgment to take all appropriate measures pursuant to the text paraprann or Article 176 of the Treaty”.
15Finally, from the publication of the Commission's proposal in the Official Journal of 20 December 1980 (C 334, p. 2) the applicant knew that the Commission had, as early as 3 December 1980, submitted to the Council a proposal for a regulation amending, in particular. Regulation No 1111/77, in order to reinstate, for the period from 1 July 1979 to 30 June 1980, the system of quotas and levies in the form in which that system had been laid down by Regulation No 1293/79 and in which it was to be reinstated by the contested provisions of Regulation No 387/81.
16In contesting the retroactivity of those provisions the applicant makes rwo further allegations: defiance of the judgments of the Court of Justice delivered on 29 October 1980 and disregard of the requirement of consultation with the European Parliament.
17As to the first point, whilst the Council, under the first paragraph of Article 176 of the Treaty, was required to take the measures necessary to comply with the judgments of the Court of Justice and whilst those measures, as the judgments of the Court of 29 October 1980 emphasize, were to be “appropriate”, for the purpose of complying with the judgments of the Court Article 176 did not forbid the Council to adopt provisions the retroactive nature of which, as has already been pointed out, enabled it to prevent the market in sweeteners from being disturbed and a discriminator) situation being brought about in favour of isoglucose producers and to the detriment of sugar producers. In that respect, the tact that the Court did not consider it necessary, in its judgments of 29 October 1983. to use the power given to it by the second paragraph ot Article 174 of the Treats to limit the effects of a pronouncement that a regulation is void, has no bearing on the extent of the powers available to the Council in application oi the first paragraph of Article 176 of the Treaty.
18As to the second point u is not disputed that the Parliament vus consulted by the Commission and gave its opinion on the provisions of Regulation No 387/81 Therefore, the arguments of the appasant company must be reiecied. First, the fact that tne Parlimant gave the opinion which moreover was favourable, only on 9 February 1981. that is to sa-, the oas before the regulation in question was adopted, does not. contran to the doubt expressed bv the applicant, affect the ircant-v of tnr consultation secondly, the fact, noted by the Court in its jugdment of 29 October 1980 that the Parliament had not given the opinion which, pursuant to Article 43 of the Treaty, it was required to give on the provisions of Regulation No 1293/79 in no way prohibited it from being consulted on the provisions of the contested Regulation No 387/81, but on the contrary Article 43 required such consultation. The applicant's argument amounts, in fact, to maintaining that proposals for the retroactive reinstatement of provisions on which originally the Parliament was not properly consulted may never be referred to it. That argument would prohibit the retroactive reinstatement of measures adopted in breach of Community law without the opinion of the Parliament, even where such reinstatement accords with the public interest and where the legitimate expectations of the traders concerned have not been frustrated, and would thus invest consultation with the Parliament, however important it may be, with consequences which are not provided for by any provision of Community law and would restrict without justification the powers of the Parliament itself as well as those of the institutions which are required to seek its opinion.
II —Second submission: Breach of the duty to state the reasons upon which a measure is based
19The applicant claims that the Council has given inadequate and inappropriate reasons for the adoption of Regulation No 387/81 both as to the actual principle of the measures adopted relating to quotas and as to the justification for giving retroactive effect to those provisions. Therefore, the applicant considers that the Council has infringed the provisions of Article 190 of the Treaty.
20According to the case-law of the Court the statement of the reasons on which ameasurc is based, which is required by Article 190 of the Treaty, must be adapted to the nature of the measure in question. They must enable the reasoning of the Community institution responsible for the measure to emerge clearly and unequivocally so as to enable those concerned to recognize the reasons tor the measure adopted and the Court to exercise its power of review
21The statement of the reasons on which Council Regulation No 387/81 is based states first that “Council Regulation (EEC) No 1111/77 of 17 May 1977 laying down common provisions for isoglucose, in the version established bv Regulation (EEC) No 1293/79, provided for the application of a system of production quotas for the period from 1 July 1979 to 30 June 1980” and, secondly that “in Cases No 138/79 and No 139/79 the Coun of Justice of the European Communities, on 29 October 1980, annulled Regulation (EEC) No 1293/79, which amended Regulation (EEC) No 1111/77, on the grounds of an infringement of an essential procedural requirement; ... in rejecting all the alleged complaints of breach of the principles of the law of competition, of proportionality and of nondiscrimination made against the system of production quotas introduced by Regulation (EEC) No 1293/79, the Court affirmed that the latter regulation was substantively in conformity with Community law; ... it is therefore appropriate to reinstate inter alia the system of quotas concerned retroactively”.
22Laconic as these reasons may be, they satisfy the requirement laid down bv Article 190 of the Treaty. In fact, by referring to the system of production quotas, which moreover was well known to those concerned, the provisions of the preamble to the contested regulation set forth in essence the objective pursued by the institution responsible for the contested measure, namely to ensure continuity in time of the system restricting isoglucose production — a system in respect of which the Court, in its judgments in Cases 138 and 139/79 of October 1980, rejected the substantive criticisms made against it by the applicant undertakings — in order to ensure an equal division of burdens on the production of isoglucose and that of liquid sugar which are in direct competition on the market in sweeteners.
23The submision as to breach of the requirement to state the reasons on which the measure was based must therefore be rejected as unfounded.
IV —Costs
24Under the terms of Article 69 of the Rules of Procedure the unsuccessful party is to be ordered to pav the costs ii ihev have been asked for in the successful party's pleading. The applicant has faiied in all its submissions and must therefore be ordered to pay all the costs including those of the intervener.
Operative part
On those grounds,THE COURT (Second Chamber)hereby:
1.Dismisses as unfounded the application for a declaration that Council Regulation No 387/81 is void;
2.Orders the applicant to pay the costs including those of the intervener.
Delivered in open court in Luxembourg on 30 September 1982.
Source: EUR-Lex, © European Union, 1998-2026. Reuse authorised under Decision 2011/833/EU.