Court of Justice 03-03-1977 ECLI:EU:C:1977:39

I — Facts and procedure

1. Article 11 (1) of Regulation (EEC) No 804/68 of the Council of 27 June 1968 on the common organization of the market in milk and milk products (JO L 148, p. 13 — OJ, English Special Edition 1968 (I), p. 176) provides that aid shall be granted for Community-produced skimmed milk processed into casein, if such milk and the casein produced from it reach certain standards.

The aid is to be paid to the manufacturer of casein or caseinates. The manu facturers are to include it in the purchase price paid to the suppliers of skimmed milk, either directly or indirectly through the suppliers of raw casein. The aid is to be paid by the intervention agency of the Member States on whose territory the casein or caseinates are manufactured (Article 2 of Regulation (EEC) No 987/68 of the Council of 15 July 1968, laying down general rules for granting aid for skimmed milk processed into casein or caseinates' JO L 169, p. 6 — OJ, English Special Edition 1968 (I), p. 262).

The aid may vary according to whether the skimmed milk is processed into casein or caseinates and according to the quality of those products (Article 3 (1) of Regulation No 987/68).

Aid is to be granted only after the casein or caseinates have been marketed (Article 4 of Regulation (EEC) No 756/70 of the Commission of 24 April 1970, on granting aid for skimmed milk processed into casein and caseinates, JO L 91, p. 28 - OJ, English Special Edition 1970 (I), p. 201)

Article 1 of Regulation (EEC) No 3061/73 of the Commission of 12 November 1973, amending Regulation (EEC) No 756/70 (OJ L 312, p. 11), in force during the period in question in the present case, fixes the aid at 3,20 u.a. per 100 kg of skimmed milk.

On 7 October 1974 the representative conversion rate between the unit of account and the Irish pound was changed from £ = 2,1644 u.a. to £ = 1,9485 u.a. (Regulation (EEC) No 2498/74 of the Council of 2 October 1974 fixing representative conversion rates to be applied in agriculture for the currencies of the new Member States. OJ L 126, p. 6). The rules laid down in Regulation (EEC) No 1134/68 of the Council of 30 July 1968, laying down rules for the implementation of Regulation (EEC) No 653/68 on conditions for alterations to the value of the unit of account used for the common agricultural policy (JO L 188, p. 1 - OJ, English Special Edition 1968 (II), p. 396) were deemed to apply to the abovementioned case of alteration of the representative conversion rate.

Regulation No 1134/68 provides in Article 4 (2) that:

‘For transactions carried out pursuant to provisions on the common agricultural policy or special trade systems for goods processed from agricultural products, the sums owed to or by a Member State or a duly authorized body, expressed in national currency and representing amounts fixed in those provisions in units of account, shall be paid on the basis of the relationship between the unit of account and the national currency which obtained at the time when the transaction or part transaction was carried out’.

Regulation No 1134/68 provides in Article 6 that:

‘For the purposes of this Regulation, the time when a transaction is carried out shall be considered as being the date on which occurs the event, as defined by Community rules or, in the absence of and pending adoption of such rules, by the rules of the Member State concerned, in which the amount involved in the transaction becomes due and payable.’

2. North Kerry Milk Products Ltd (hereinafter referred to as “NKM”), the plaintiff in the main action, carries on the business of milk and milk product producers including the production and manufacture of casein and caseinates from skimmed milk.

Between 4 July 1974 and 10 October 1974 it manufactured 859 400 tonnes of casein and caseinates from skimmed milk.

The Minister of Agriculture and Fisheries, the defendant in the main action, is the agency in Ireland responsible for the carrying out of the operations and arrangements of the common agricultural policy of the Community including the payment of aids and subsidies on agricultural products.

It appears that the Minister paid NKM aid amounting to £494 413,69 in respect of the casein and caseinates manufactured by the latter in the abovementioned period and that the Minister based his calculation on the representative conversion rate between the unit of account and the Irish pound prevailing at the date when the casein and caseinates were manufactured (£ = 2,1644 u.a.), which was before the entry into force of the abovementioned Regulation No 2498/74, on 7 October 1974.

It is agreed between the parties that the company is entitled to the equivalent of1 050,442 u.a. in respect of the casein and caseinates in question.

NKM claims an additional sum of £44 687,71, which it alleges is due to it because the said units of account should be converted into Irish pounds at the representative conversion rate prevailing on the day the casein and caseinates in question were marketed, which was after the entry into force of Regulation No 2498/74 altering the conversion rate to £ = 1,9485 u.a.

NKM brought an action on these grounds before the High Court of Ireland.

3. Before deciding further, the High Court stayed the proceedings and requested the Court of Justice, pursuant to Article 177 of the EEC Treaty, to give a preliminary ruling on the following question:

“Is the amount of aid payable to the plaintiff to be calculated by reference to

1. The rate of exchange between the Irish pound and the unit of account applicable on the date of manufacture of the casein or caseinates, or,

2. The rate of exchange between the Irish pound and the unit of account applicable on the date of marketing of the casein or caseinates.”

4. The order of the High Court of 21 June 1976 was registered at the Court of Justice on 13 August 1976.

Written observations have been submitted on behalf of the plaintiff in the main action by Arthur Cox & Co., Solicitors, on behalf of the defendant in the main action by Liam J. Lysaght, Chief State Solicitor and on behalf of the Commission of the European Communities by its Legal Adviser, R. Wainwright.

After hearing the report of the Judge-Rapporteur and the views of the Advocate-General the Court decided to open the oral procedure without any preparatory inquiry.

II — Written observations submitted to the Court

III — Oral procedure

North Kerry Milk Products Ltd, represented by R. O'Hanlon S.C., and the Commission, represented by its Agent, R. Wainwright, submitted oral observations at the hearing on 19 January 1977.

At this hearing the parties adduced new factors summarized below:

• NKM submits that it is quite clear from a reading of Article 4 (2) of Regulation No 1134/68, without going forward to Article 6 of the same regulation, that the point in time ‘when the transaction or part transaction was carried out’ is equivalent to the marketing of the product: Article 4 (2) is concerned with the amounts due by a duly authorized body for transactions carried out, not for transactions which are inchoate or not yet completed. It is concerned with transactions in respect of which sums have become due from the intervention agency. According to Article 4 (1) of Regulation No 756/70, sums become due only after the product has been marketed.

• NKM understands that in the Commission's submission Article 6 is concerned with some factor which generates a claim but does not necessarily complete it so that it is legally maintainable. According to NKM this interpretation would mean that in every case where the problem of the conversion rate arises one would have to examine the transaction in a search for the central element in the transaction which could be regarded as generating the claim, although not necessarily completing it. NKM submits that it is much more logical and reasonable to assume that Article 6, instead of creating problems of this kind, sets out to solve a problem by offering the fairly readily ascertainable point in time at which the debt becomes ‘due and payable’. In the text of Article 6 in the other languages at all stages one finds the concept not of an inchoate claim for aid at some time in the future but a present debt which is now recoverable.

• NKM further submits that the Treaty was concerned not merely to produce a situation where skimmed milk would be taken off the market and processed into casein but also to induce the manufacturer to follow this up with the marketing procedure. Moreover considerable stress is laid in the regulations on the concept of improvement in the quality of production on the basis that there is a more ready market available for high-quality casein than for inferior casein. So again the issue of marketing was quite clearly considered by the Council when it adopted the policy decisions which are reflected in the regulations. And therefore NKM suggests that the element of marketing is as important in the idea of the grant of the aids as the element of manufacture.

Concerning the argument of NKM that the manufacturer is not entitled to claim the aid until the casein is marketed, the Commission submits that there are other conditions which have to be fulfilled, non-fulfilment of which removes the entitlement of the manufacturer to claim that aid: the submission of a monthly record, the submission to supervision, and the making of the claim in a certain form. In the Commission's submission failure to comply with any one of these other conditions would render the claim untenable.

The Commission further submits that the reason why it has itself in a number of regulations, whereby the system of aid and the amount of aid have been changed, used the marketing of the casein as a point of reference for the entry into force of the regulation bringing about the change is that in the case of an increase of the aid, the Commission wanted to make that increase effective as soon as possible. On the other hand, the Commission submits that in cases where the aid has been reduced, that is for instance by Regulation No 2814/71, a gap of one month was left between the publication of the regulation, which was on 28 December, and its entry into force 1 February in order to enable manufacturers, if they still so desired, to take advantage of the old higher rate to put their casein on the market before the latter date.

In reply to a question put by the Court, the Commission stated that within the context of this particular aid no case has been brought to its attention where the stock of casein manufactured from Community milk has been destroyed by a fire or some other means, between its manufacture and marketing. If such a situation should arise, the producer in question would have no right to payment, according to the Commission: there was a right to payment of the aid and there is in this situation, in a sense, still a right to payment of the aid, but it is a right which can no longer be realized, which can no longer be put into effect, because one of the conditions of payment is no longer fulfilled. According to the Commission the same solution would have to be applied if the manufacturer suffered a fire, not in his warehouse, but in his office, which destroyed his accounts, but did not destroy the casein.

In reply to a second question put by the Court NKM stated that if it obtained the additional amount of aid claimed that amount would be paid to the suppliers of the skimmed milk, NKM being a farmers cooperative company.

The Advocate-General delivered his opinion at the hearing on 9 February 1977.

Costs

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