Márton Urbán v Vám- és Pénzügyőrség Észak-alföldi Regionális Parancsnoksága (C-210/10)

Contents

Judgment of the Court (First Chamber)9 February 2012^note(Road transport — Breach of the rules on the use of the tachograph — Obligation on Member States to establish proportionate penalties — Flat-rate fine — Proportionality of the penalty)In Case C-210/10,REFERENCE for a preliminary ruling made under Article 267 TFEU by the Hajdú-Bihar Megyei Bíróság (Hungary) by decision of 19 October 2009, received at the Court on 3 May 2010, in the proceedingsMárton UrbánvVám- és Pénzügyőrség Észak-alföldi Regionális Parancsnoksága,THE COURT (First Chamber),composed of A. Tizzano, President of the Chamber, M. Safjan, M. Ilešič, E. Levits and M. Berger (Rapporteur), Judges,Advocate General: J. Mazák,Registrar: A. Calot Escobar,having regard to the written procedure,after considering the observations submitted on behalf of:— the Hungarian Government, by M.Z. Fehér, K. Szíjjártó and G. Koós, acting as Agents,— the Danish Government, by V. Pasternak Jørgensen, acting as Agent,— the Austrian Government, by E. Riedl, acting as Agent,— the European Commission, by N. Yerrell and K. Talabér-Ritz, acting as Agents,having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,gives the following

Judgment

1This reference for a preliminary ruling concerns the interpretation of Article 19(1) and (4) of Regulation (EC) No 561/2006 of the European Parliament and of the Council of 15 March 2006 on the harmonisation of certain social legislation relating to road transport and amending Council Regulations (EEC) No 3821/85 and (EC) No 2135/98 and repealing Council Regulation (EEC) No 3820/85 (OJ 2006 L 102, p. 1).

2The reference has been made in proceedings between Mr Urbán and the Vám- és Pénzügyőrség Észak-alföldi Regionális Parancsnoksága (Észak-Alföld Regional Customs and Finance Headquarters) concerning the imposition of a fine for non-compliance with the provisions governing the use of record sheets for recording equipment in the heavy goods vehicle driven by the applicant in the main proceedings.

Legal context

European Union law

3Articles 13 to 16 of Council Regulation (EEC) No 3821/85 of 20 December 1985 on recording equipment in road transport (OJ 1985 L 370, p. 8), as amended by Regulation No 561/2006 (‘Regulation No 3821/85’) lay down the obligations of employers and drivers in respect of the use of recording equipment and record sheets.

4Under Article 15(5) of Regulation No 3821/85:‘Each [driver] shall enter the following information on his record sheet:(a) on beginning to use the sheet — his surname and first name;(b) the date and place where use of the sheet begins and the date and place where such use ends;(c) the registration number of each vehicle to which he is assigned, both at the start of the first journey recorded on the sheet and then, in the event of a change of vehicle, during use of the sheet;(d) the odometer reading:— at the start of the first journey recorded on the sheet,— at the end of the last journey recorded on the sheet,— in the event of a change of vehicle during a working day (reading on the vehicle to which he was assigned and reading on the vehicle to which he is to be assigned);(e) the time of any change of vehicle.’

5Article 15(7)(c) of Regulation No 3821/85 provides as follows:‘An authorised inspecting officer may check compliance with Regulation (EC) No 561/2006 by analysis of the record sheets, of the displayed or printed data which have been recorded by the recording equipment or by the driver card or, failing this, by analysis of any other supporting document that justifies non-compliance with a provision, such as those laid down in Article 16(2) and (3).’

6Article 19(1) and (4) of Regulation No 561/2006 states:1. Member States shall lay down rules on penalties applicable to infringements of this Regulation and Regulation (EEC) No 3821/85 and shall take all measures necessary to ensure that they are implemented. Those penalties shall be effective, proportionate, dissuasive and non-discriminatory. ……4. Member States shall ensure that a system of proportionate penalties, which may include financial penalties, is in force for infringements of this Regulation or Regulation (EEC) No 3821/85 on the part of undertakings, or associated consignors, freight forwarders, tour operators, principal contractors, subcontractors and driver employment agencies.’

7Article 9(1) and (3) of Directive 2006/22/EC of the European Parliament and of the Council of 15 March 2006 on minimum conditions for the implementation of Council Regulations (EEC) No 3820/85 and (EEC) No 3821/85 concerning social legislation relating to road transport activities and repealing Council Directive 88/599/EEC (OJ 2006 L 102, p. 35) provides:1. Member States shall introduce a risk rating system for undertakings based on the relative number and severity of any infringements of Regulations (EEC) No 3820/85 or (EEC) No 3821/85 that an individual undertaking has committed. ……3. An initial list of infringements of Regulations (EEC) No 3820/85 and (EEC) No 3821/85 is set out in Annex III.With a view to giving guidelines on the weighting of infringements of Regulations (EEC) No 3820/85 and (EEC) No 3821/85, the Commission may, as appropriate, in accordance with the procedure referred to in Article 12(2), adapt Annex III with a view to establishing guidelines on a common range of infringements, divided into categories according to their gravity.…’

National law

8Paragraph 20(1) and (4) of Law No I of 1988 on road transport (a közúti közlekedésről szóló 1988. évi I. törvény) (‘the Law on road transport’), in the version in force (Magyar Közlöny 2006/1) at the time of the breach, states:1.A fine is to be imposed on anyone who breaches the provisions of this Law or other legislation, that is to say:…(c) the provisions relating to driving time, break and rest period rules laid down in [Regulation No 561/2006], in this Law, and in the European Agreement concerning the work of crews of vehicles engaged in international road transport (AETR) ratified by Law No IX of 2001;(d) the provisions on the use of recording equipment and tachograph discs laid down in [Regulation No 3821/85] and in this Law;…4. A fine of between HUF 50 000 and HUF 800 000 shall be imposed on anyone who breaches the provisions of subparagraph (1). The amount of the fines applicable for the breach of individual provisions shall be set out in a specific text. Where a number of persons are to be regarded as liable for the breach of the provisions referred to in subparagraph (1), the amount of the fine to be paid shall be divided between them on the basis of the respective liability of the persons concerned.…’

9The specific text referred to in Paragraph 20(4) of the Law on road transport, applicable to the facts at issue in the main proceedings, was Government Decree No 57/2007 fixing the amount of fines for breaches of certain provisions concerning the transport by road of goods and persons (a közúti árufuvarozáshoz és személyszállításhoz kapcsolódó egyes rendelkezések megsértése esetén kiszabható bírságok összegéről szóló 57/2007. Korm. Rendelet) of 31 March 2007 (Magyar Közlöny 2007/39) (‘Government Decree No 57/2007’).

10Under Paragraph 1(1) of Government Decree No 57/2007:‘In the event of breach of the provisions laid down in Paragraph 20(1) of the Law, the fines provided for in Paragraphs 2 to 10 shall be imposed in administrative proceedings.’

11Paragraph 5(1) of Government Decree No 57/2007 provides:‘1.Anyone breaching the provisions of Article 20(1)(d) of [the Law on road transport] set out in Table 4 shall be required to pay a fine corresponding to the amount set out in that table.If the authority carrying out the check establishes that the document referred to in point 1 is missing, but the missing document, valid on the day of the check, is submitted to that authority within eight days of the date of the check, the amount of the fine laid down in that point shall be reduced by 50%.’

The main proceedings and the questions referred for a preliminary ruling

13On 25 March 2009, during a roadside inspection conducted by a patrol from the Debrecen (Hungary) Customs Office at the Ártánd border crossing, Mr Urbán, who was driving a Hungarian-registered heavy goods vehicle from Hungary to Romania, was stopped and an examination of the vehicle’s recording equipment and recording discs was carried out. No faults were found in the use of the tachograph in the course of the inspection. However, one of the 15 recording discs produced by Mr Urbán did not show the kilometre count on arrival.

14Consequently, the customs authority at first instance, by a decision of 25 March 2009, ordered Mr Urbán to pay an administrative fine of HUF 100 000 (corresponding, at that date, to approximately EUR 332) for breach of the rules on the use of record sheets.

15Mr Urbán brought an administrative appeal against that decision, seeking the cancellation or reduction of the fine imposed, on the ground that the kilometre count was set out in that day’s bill of lading and that the amount of the fine appeared for that reason to be excessive in relation to the infringement which he was alleged to have committed.

16The defendant in the main proceedings, as the authority at second instance, dismissed that appeal on 12 May 2009, holding that the authority at first instance had correctly applied Paragraph 5(1) of Government Decree No 57/2007 and Table 4, point 3, referred to in that provision, which sets out the objective breach and the amount of the corresponding fine which the customs authority is required to impose.

17Mr Urbán brought judicial proceedings for annulment of that decision before the Hajdú-Bihar Megyei Bíróság (Regional Court of Hajdú-Bihar). Restating the arguments set out in his administrative action, he argued that the fact that the record sheet of the recording equipment did not show the final kilometre count at the end of the last journey did not involve any possibility of abuse inasmuch as the final kilometre count was indicated on the bill of lading. The information missing from the record sheet could therefore have been precisely checked on the basis of the information provided in that bill of lading.

18Those were the circumstances in which the Hajdú-Bihar Megyei Bíróság, being uncertain as to whether the system of penalties laid down by Government Decree No 57/2007 is proportionate to the stated objective of Regulations No 3821/85 and No 561/2006, decided to stay the proceedings and to refer the following questions to the Court for a preliminary ruling:1. Is a system of penalties under which it is mandatory to impose identical financial penalties of up to HUF 100 000 for any breach of the requirements laid down in Articles 13 to 16 of [Regulation No 3821/85] consistent with the requirement of proportionality laid down by Article 19(1) and (4) of [Regulation No 561/2006]?2. Is a system of penalties which does not adjust the amount of the penalty according to the gravity of the breach of the rules consistent with the requirement of proportionality?3. Is a system of penalties which does not allow of any possible defence to a breach of the rules consistent with the requirement of proportionality?4. Is a system of penalties which makes no distinction according to the personal circumstances of the offenders consistent with the requirement of proportionality?’

Consideration of the questions referred

The first and second questions

19By its first and second questions, which it is appropriate to consider together, the national court wishes to know, in essence, whether the requirement of proportionality laid down by Article 19(1) and (4) of Regulation No 561/2006 is to be interpreted as precluding a system of penalties, such as that instituted by Government Decree No 57/2007, which provides for the imposition of a flat-rate fine for all breaches, no matter how serious, of the rules on the use of record sheets laid down in Articles 13 to 16 of Regulation No 3821/85.

20As a preliminary point, it must be borne in mind that, according to recital 27 in the preamble to Regulation No 561/2006, it is desirable, in the interests of clear and effective enforcement of the rules on driving time and rest periods, to ensure uniform provisions on the liability of transport undertakings and drivers for infringements of that regulation. That liability may result in penal, civil or administrative penalties, as the case may be, in the Member States.

21In that regard, Article 19(1) of that regulation requires Member States to lay down ‘rules on penalties applicable to infringements of this Regulation and Regulation (EEC) No 3821/85 … [which] shall be effective, proportionate, dissuasive and non-discriminatory’.

22However, it is clear that that regulation does not contain more precise rules with regard to the establishment of those national penalties and, in particular, that it does not establish any express criterion for the assessment of the proportionality of such penalties.

23According to settled case-law, in the absence of harmonisation of European Union legislation in the field of penalties applicable where conditions laid down by arrangements under that legislation are not complied with, Member States are empowered to choose the penalties which seem to them to be appropriate. They must, however, exercise that power in accordance with European Union law and its general principles, and consequently in accordance with the principle of proportionality (see, inter alia, Case C-262/99 Louloudakis [2001] ECR I-5547, paragraph 67, and Case C-188/09 Profaktor Kulesza, Frankowski, Jóźwiak, Orłowski [2010] ECR I-7639, paragraph 29).

24Thus, in the present case, the measures imposing penalties permitted under national legislation must not exceed the limits of what is appropriate and necessary in order to attain the objectives legitimately pursued by the legislation in question; when there is a choice between several appropriate measures, recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued (see, to that effect, Joined Cases C-379/08 and C-380/08 ERG and Others [2010] ECR I-2007, paragraph 86).

25In the context of Regulations No 3821/85 and No 561/2006, those objectives are, firstly, the improvement of working conditions of drivers to whom those regulations apply and the improvement of road safety in general and, secondly, the establishment of common rules on driving times, drivers’ breaks and rest periods and their monitoring.

26To that end, those regulations provide for a set of measures, in particular, common rules on driving times, drivers’ breaks and rest periods and their monitoring, compliance with which must be ensured by the Member States through the application of a system of penalties for any breach of those regulations.

27It is in the light of those principles that the first and second questions referred, as reformulated in paragraph 19 of the present judgment, must be answered.

28In the present case, it must be pointed out that Paragraph 20(4) of the Law on road transport penalises, by way of a fine of between HUF 50 000 and HUF 800 000, anyone who breaches the provisions of Regulations No 3821/85 and No 561/2006. It must also be stated that that provision confers on the competent authorities the power to set the amount of the fine in the light of the nature and seriousness of the breach.

29However, Government Decree No 57/2007 introduces, in Paragraph 5(1), a flat-rate fine of HUF 100 000 for all breaches of the rules relating to the use of record sheets laid down in Articles 13 to 16 of Regulation No 3821/85, without providing for any distinction to be made between the nature and seriousness of the different breaches in question.

30Thus, although a system such as that at issue in the main proceedings may appear appropriate to achieve the objectives stated in Regulations No 3821/85 and No 561/2006, it must none the less be held that it exceeds the limits of what is necessary to attain the objectives legitimately pursued by those regulations.

31It follows, admittedly, from Article 15(5) of Regulation No 3821/85 that the driver of a motor vehicle is required to enter on the record sheet the kilometre count ‘at the end of the last journey recorded on the sheet’.

32The omission of that information must, however, contrary to the submissions of Hungary, be regarded as being a minor infringement.

33As the Commission has rightly pointed out, breaches of Regulations No 3821/85 and No 561/2006 do not all have the same degree of seriousness. Breaches likely to prevent the effective monitoring of drivers’ working conditions and compliance with road safety cannot be ranked in the same category as minor infringements which, although indeed constituting breaches of the provisions of the regulations in question, do not, however, hinder monitoring of compliance with the obligations laid down by European Union legislation.

34In that regard, as the Commission also submitted, an infringement of Article 15(7) of Regulation No 3821/85, which provides that ‘[w]henever requested by an authorised inspecting officer to do so, the driver must be able to produce record sheets for the current week, and in any case for the last day of the previous week on which he drove’, constitutes a more serious infringement than that of Article 15(1) of that regulation, which requires drivers not to use dirty or damaged record sheets and to provide adequate protection for record sheets.

35By analogy, it must be stated that the omission by a driver to enter on the record sheet the kilometre count at the end of the last journey has a minimal, indeed even non-existent, impact on road safety, in view of the other obligations set out in Article 15 of that regulation.

36That finding is borne out by the fact that the Commission, basing itself on Article 9(3) of Directive 2006/22, adopted Directive 2009/5/EC of 30 January 2009 amending Annex III to Directive 2006/22/EC (OJ 2009 L 29, p. 45), which contains guidelines on a common range of infringements of Regulations No 3821/85 and No 561/2006, divided into categories according to their gravity.

37Although it is true that the concept of a scale of the different infringements of the provisions of Regulations No 3821/85 and No 561/2006 was only subsequently set out, by Directives 2006/22 and 2009/5, which are not applicable to the dispute in the main proceedings, it must none the less be held that that idea was already apparent, at least implicitly, in Regulation No 561/2006. With regard to penalties, recital 26 in the preamble to Regulation No 561/2006 referred to a ‘common range of measures open to Member States’.

38Furthermore, Annex III to Directive 2006/22, as amended, which draws a distinction between groups of infringements of Regulation No 561/2006 and groups of infringements of Regulation No 3821/85, states, for each type of obligations, their legal basis, the type of infringements and their level of seriousness. The latter are classified in three levels, namely ‘very serious infringement’, ‘serious infringement’ and ‘minor infringement’.

39With regard to the infringements of Regulation No 3821/85, that annex provides, with regard to the obligations concerning the information to be given, the legal basis of which is Article 15(5) of Regulation No 3821/85, for an infringement entitled ‘Odometer reading (end) missing on record sheet’. That infringement is regarded as a ‘minor infringement’.

40Moreover, notwithstanding the fact that the Member States must provide for penalties in the case of failure to state the kilometre count on arrival, that information is clearly not vital to a successful completion of the check of compliance with the rules concerning driving times, breaks and rest periods. Likewise, an omission from that information does not constitute the same threat to road safety as does the infringement of other provisions in the category of infringements relating to the ‘fill-in information’.

41Consequently, the imposition of flat-rate fines for all breaches of the rules on the use of record sheets, without adjustment of the amount of the penalty in line with the seriousness of the breach, appears to be disproportionate in the light of the objectives pursued by the European Union legislation.

42Furthermore, it is appropriate to note that the Hungarian legislature adopted, on 29 July 2009, Government Decree No 156/2009, not applicable to the dispute in the main proceedings, which repealed, with effect from 1 August 2009, Government Decree No 57/2007.

43The new system of penalties introduced by that Government Decree henceforth provides for fines graduated to take account of the seriousness of the breaches of Articles 13 to 16 of Regulation No 3821/85. With regard to infringements analogous to that under examination in the main proceedings, that Government Decree fixes the amount of the fine to be imposed at HUF 30 000 and classifies such infringements as ‘minor infringements’.

44In the light of the foregoing, the answer to the first and second questions referred is that the requirement of proportionality laid down in Article 19(1) and (4) of Regulation No 561/2006 must be interpreted as precluding a system of penalties, such as that introduced by Government Decree No 57/2007, which provides for the imposition of a flat-rate fine for all breaches, no matter how serious, of the rules on the use of record sheets laid down in Articles 13 to 16 of Regulation No 3821/85.

The third and fourth questions

45By its third and fourth questions, which it is appropriate to examine together, the national court wishes to know, in essence, whether the requirement of proportionality laid down by Article 19(1) and (4) of Regulation No 561/2006 is to be interpreted as precluding, on the one hand, a system of penalties, such as that at issue in the main proceedings, which imposes strict liability on persons committing infringements and, on the other, the severity of the penalties provided for by that system.

46At the outset, it must be borne in mind that, according to the case-file, the national authorities responsible for with implementing Paragraph 5(1) of Government Decree No 57/2007 have no power to depart from the flat-rate amount of the fine laid down by taking account of the factual circumstances of a particular case and thus to adjust that amount in order to reflect those circumstances.

47With regard, firstly, to the compatibility of the institution of strict liability with the principle of proportionality, the Court has already ruled that a system of strict liability penalising breaches of a regulation, in particular in the area of social legislation relating to road transport, is not in itself incompatible with Community law (see, to that effect, Case C-326/88 Hansen [1990] ECR I-2911, paragraphs 14 to 19, and Case C-7/90 Vandevenne and Others [1991] ECR I-4371, paragraphs 16 and 17; see, by analogy, with regard to other fields, Case C-177/95 Ebony Maritime and Loten Navigation [1997] ECR I-1111, paragraph 36).

48According to the Court, the imposition of a system of strict liability is not disproportionate in relation to the objectives pursued if that system is such as to encourage the persons concerned to comply with the provisions of a regulation and where the objective pursued is a matter of public interest which may justify the introduction of such a system (see, to that effect, Hansen, paragraph 19).

49In the light of that case-law, it must next be borne in mind that Regulation No 3821/85 places particularly on drivers the responsibility for applying the obligations relating to recording equipment. The provisions of that regulation concerning the use of the record sheets give precise definitions as to the manner in which drivers must record the necessary information, such as the odometer reading. Thus, pursuant to the second indent of Article 15(5)(d) of that regulation, it is imperative that the kilometre count on arrival be stated on the record sheet.

50Under the Hungarian legislation, infringement of that obligation occurs in the case where the odometer reading corresponding to the end of the last journey does not appear on the record sheet. In order not to be in breach of that requirement, the driver must therefore comply with the obligations as defined by Regulation No 3821/85.

51Given that, on the one hand, that system of strict liability is such as to encourage drivers to comply with the provisions of Regulation No 3821/85 and, on the other, road safety and improvements in the social conditions for drivers are matters of public interest, the introduction, by the Hungarian legislature, of a system of strict liability may be justified.

52Accordingly, the establishment of a system of strict liability such as that at issue in the main proceedings, which penalises infringement of that regulation, is not, of itself, incompatible with European Union law.

53Secondly, with regard to the severity of the fine provided for by the system of penalties at issue in the main proceedings, it is appropriate to recall the case-law cited in paragraphs 23 and 24 of the present judgment, according to which the Member States are empowered to choose the sanctions which seem to them to be appropriate. The Member States are, however, required to exercise that power in accordance with European Union law and its general principles, and consequently in accordance with the principle of proportionality. Measures imposing penalties must not, therefore, inter alia, exceed the limits of what is necessary in order to attain the objectives legitimately pursued by the legislation in question or be disproportionate to those aims.

54It is, however, necessary to point out, in that respect, that Member States are required to comply with the principle of proportionality not only as regards the determination of factors constituting an infringement and the determination of the rules concerning the severity of fines, but also as regards the assessment of the factors which may be taken into account in the fixing of a fine.

55In the light of the foregoing, it must be stated that the obligation on the national authorities responsible for with penalising infringements of Regulations No 3821/85 and No 561/2006 to impose a fine at a flat rate of HUF 100 000, without being able to take account of the actual circumstances of the individual case and, if appropriate, to reduce the amount of that fine, does not satisfy the conditions required by the case-law cited in paragraphs 23 and 24 of the present judgment.

56Accordingly, the Hungarian penalty system appears to be disproportionate, particularly in a case such as that in the main proceedings, in which only one out of the 15 discs checked was found not to have been completed properly, in that the kilometre count on arrival had not been recorded. In addition, it is apparent from the case-file before the Court that the failure to complete the recording disc at issue in the main proceedings could not have constituted an abuse inasmuch as the information missing from the record sheet was in fact set out on the bill of lading.

57With regard, firstly, to the condition that a measure imposing a penalty must not exceed the limits of what is necessary in order to attain the objectives legitimately pursued by the legislation at issue in the main proceedings, it must be stated that it would also be possible for the competent national authorities to achieve the objectives pursued through the use of less restrictive measures, given that, in reality, the infringement committed did not adversely affect the objectives of road safety and drivers’ working conditions laid down in Regulations No 3821/85 and No 561/2006.

58With regard, secondly, to the condition that the measure imposing a penalty must not be disproportionate to the aims pursued, it is necessary to note that, as is evident from the decision making the reference, the amount of that fine is almost equivalent to the average monthly net income of an employee in Hungary. Consequently, the severity of the penalty appears, in the main proceedings, to be disproportionate to the infringement committed.

59Having regard to the foregoing, the answer to the third and fourth questions is that the requirement of proportionality laid down in Article 19(1) and (4) of Regulation No 561/2006 must be interpreted as not precluding a system of penalties, such as that introduced by Government Decree No 57/2007, which lays down strict liability. By contrast, that requirement must be interpreted as precluding the severity of the penalty provided for by that system.

Costs

60Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

Operative part

On those grounds, the Court (First Chamber) hereby rules:

1.The requirement of proportionality laid down in Article 19(1) and (4) of Regulation (EC) No 561/2006 of the European Parliament and of the Council of 15 March 2006 on the harmonisation of certain social legislation relating to road transport and amending Council Regulations (EEC) No 3821/85 and (EC) No 2135/98 and repealing Council Regulation (EEC) No 3820/85 must be interpreted as precluding a system of penalties, such as that introduced by Government Decree No 57/2007 fixing the amount of fines for breaches of certain provisions concerning the transport by road of goods and persons (a közúti árufuvarozáshoz és személyszállításhoz kapcsolódó egyes rendelkezések megsértése esetén kiszabható bírságok összegéről szóló 57/2007, Korm. Rendelet) of 31 March 2007, which provides for the imposition of a flat-rate fine for all breaches, no matter how serious, of the rules on the use of record sheets laid down in Articles 13 to 16 of Council Regulation (EEC) No 3821/85 of 20 December 1985 on recording equipment in road transport, as amended by Regulation No 561/2006.

2.The requirement of proportionality laid down in Article 19(1) and (4) of Regulation No 561/2006 must be interpreted as not precluding a system of penalties, such as that introduced by Government Decree No 57/2007 of 31 March 2007 fixing the amount of fines for breaches of certain provisions concerning the transport by road of goods and persons, which lays down strict liability. By contrast, that requirement must be interpreted as precluding the severity of the penalty provided for by that system.