Court of Justice 23-02-1978 ECLI:EU:C:1978:36

A — An Bord Bainne accepts for the purpose of the present proceedings that the aids payable to it under the contracts in question had to be diminished by the increase in the buying-in price of butter which was effected by Regulation No 2496/74 of the Council. However it claims that it is only through that regulation that the buying-in price for butter could lawfully be changed during the milk marketing year concerned, and that there is no legal basis for contending that that price has also been changed incidentally and indirectly by the operation of Regulation No 2498/74. The reference in Regulation No 1064/69 to ‘the buying-in price’ means the buying-in price for butter, as expressed in units of account, and as determined by special act of the Council in each milk marketing year, subject only to the right of the Council to alter such buying-in price by an act passed after due deliberation, during the marketing year for which such price was fixed. It is claimed that Regulation No 2498/74 has no effect on the buying-in price for butter: that price, as expressed in units of account, is not affected by the alteration of the representative conversion rate for the Irish pound.

Such alteration merely indicates that the old representative conversion rates did not reflect current economic realities at the time, and the regulation in seeking to rectify that situation provided a new representative conversion rate for the purpose of restoring the new Member Sutes to equal terms with their partners in the Community.

Furthermore, only the Community institutions, and not the national intervention agencies, are authorized to alter the intervention price for butter. At the time when the contracts referred to in these proceedings were entered into, Article 29 of Regulation No 685/69 made provision for change in the amount of aid only in the event of a change in the buying-in price of butter (that is to say, a price expressed in units of account). It is to be assumed that the reference in the storage contracts at issue in this case to such alteration in price was intended to have the same meaning. Moreover, it appears from the first subparagraph of Article 10 (1) of Regulation No 985/68, stipulating that the amount of aid paid to the storer shall be fixed ‘for the Community’, that that amount must be the same throughout the Community. However, that would not be the case if the amount of the aid in question could have been decreased because of an alteration in the representative rate of the Irish pound.

Accordingly, in relation to the first question, An Bord Bainne submits that the answer should be that:

‘Regulation (EEC) No 2498/74 of the Council did not have the effect of increasing the buying-in price of butter within the meaning of that expression as used in Article 29 of Regulation (EEC) No 685/69 of the Commission, as amended by Article 2 of Regulation (EEC) No 1064/69 of the Commission, and as further amended by Article 4 of Regulation (EEC) No 603/70 of the Commission.’

Going on to consider the second question, An Bord Bainne denies that the expression ‘buying-in price’, as it appears in the above-mentioned regulations, can have been altered by the effect of Regulation No 2517/74, and thus have been given a new meaning by virtue of that regulation as and from 1 October 1974, incorporating the concept of the cash equivalent in monetary terms received by the seller into intervention.

The interested party's right to obtain payment of storage aids is based inter alia on storage contracts concluded with the competent intervention agency which specify the conditions necessary for that purpose. If Regulation No 2517/74 were to be construed as adding to those conditions the additional condition that an increase in the buying-in price expressed in national currency could change the contractual position, it would unilaterally modify the terms of the contracts to the interested party's detriment.

However, such a unilateral modification of a contractual right would be contrary to a general principle common to the laws of the Member States, that no one should be deprived of property without just compensation. An Bord Bainne examines in deuil the case-law of the Court of Justice on the safeguard of fundamental rights and the observance of general principles of law and argues that furthermore it emerges therefrom that Community law protects vested rights and recognizes that traders' legitimate expectation of the continuance of an existing legal system may in certain circumstances require a guarantee that commercial transactions already entered into may be carried through in the manner contemplated. The regulations concerning the system of aids for private storage of butter and cream make it particularly necessary that these principles of case-law should be observed and applied.

The fact that the amount of aid and other contents of the contract are fixed by Community regulations and the fact moreover that the application of the system is made subject to precise conditions, such as the making of formal contracts between the interested party and the competent intervention agency and the observance of a minimum period of storage, show in fact that the person claiming to receive aid who has entered into a storage contract for that purpose is induced by those circumstances and by the guarantee of the payment of a definite amount to act in a manner which would otherwise cause him loss in several ways (the tying up of capiul), the costs of putting the product into store and removing it, commercial risk, and so on).

In these circumstances, it is submitted that Regulation No 2157/74 should be construed as not having jeopardized the vested rights and legitimate expectations of traders who had already bound themselves by storage contracts prior to its enactment with a view to obtaining the aid at issue. Accordingly, the Court should reply in the negative to part (b) of the second question.

An Bord Bainne also relies upon these considerations to provide an answer to the third question.

At the time when the storage contracts were entered into, the only diminution which the contracting parties agreed might take place in the aids to be calculated in units of account, was to arise in the event of an increase taking place in the buying-in price of butter, namely, a figure which was determined in units of account by specific regulation of the Council for each marketing year. For the Commission to seek to change this contractual situation by Regulation No 2517/74, if it is to be regarded as affecting storage contracts entered into prior to its entry into force, would, it is submitted, fail to have regard to the recognition given in Community law to acquired rights and to the principle of legitimate expectation already referred to.

In so doing, not only did the Commission adopt an act which was incompatible with the Treaty and the rules of law relating to its application, but it also exceeded the powers conferred on it by Article 155 (fourth indent) of the Treaty and its powers under Article 6 (7) of Regulation No 804/68. In conferring powers to adopt ‘detailed rules for the application of the intervention system and in particular the amount of aid for private storage’, the Council was not purporting to give to the Commission authority to make rules with retrospective effect which would result in diminution of aids already agreed to be paid before the rules were adopted.

The Council itself dealt with the circumstances under which storage aid could be increased or the amount thereof amended, when it prescribed in Regulation No 985/68 that the amount of aid could be ‘increased’ when the market had developed unfavourably under conditions which could not be foreseen, and that the amount of aid could be ‘amended’ for ‘future contracts’ if the state of the market so required, but it made no provision for ‘decrease’ in aids in the case of existing contracts.

Furthermore, if it is accepted that the Regulation No 2517/74 has retrospective effect, then it is submitted that the Commission infringed an essential procedural requirement in that in the regulation it did not give an adequate statement of the reasons for which it was departing in a significant manner from the principles generally applied in the law of the Community.

Finally, as regards the answer to the fourth question, An Bord Bainne submits that, having regard in particular to Articles 4 (2) and 6 of Regulation No 1134/68, Article 26 of Regulation No 685/69, the various clauses of the storage contracts entered into in this case and the case-law of the Court in relation to the provisions concerned, the entitlement to storage aid arises only when the butter is withdrawn from storage with the written permission of the intervention agency after the requisite minimum period, the conditions of contract having in the meantime been fully complied with. An Bord Bainne suggests accordingly that the reply to the said question should be to the effect that the conversion rate applicable to the entire amount of units of account payable as storage aids should be that obtaining as of the date when the butter was withdrawn from storage.

B — In his written observations, the Irish Minister for Agriculture refers to the arguments put forward in the main action. He contends in particular that the alteration in the rate of exchange for the Irish pound, enacted by Regulation No 2498/74 of the Council, resulted in an increase in the buying-in price of butter expressed in Irish currency which was applied by the intervention agencies; and that the result of this increase, added to the increase brought about by Regulation No 2496/74 of the Council fixing for Ireland a new buying-in price for butter expressed in units of account, is that no aid for the private storage of butter and cream is payable to An Bord Bainne under the storage contracts concluded.

Moreover, supposing that Regulation No 2498/74 did not by its own terms or by its own force affect the level of the intervention price for butter in Ireland, that regulation should be deemed to have done so by virtue of the provisions of Regulation No 2517/74. Even if the ‘buying-in price’ for butter, referred to in Regulation No 1064/69 and in the contracts entered into by the plaintiff, formerly meant the intervention price determined in units of account by special act of the Council for each marketing year, that expression was given a new meaning as from 1 October 1974, the date on which Regulation No 2517/74 entered into force, incorporating the concept of ‘the cash equivalent in monetary terms’ received by the seller into intervention.

The Minister for Agriculture also contends that, in the circumstances mentioned in the last question referred for a preliminary ruling, the amount payable to the plaintiff in discharge of the obligations assumed under the aforementioned contracts should be calculated by applying the conversion rate applicable from time to time, and that the new conversion rate resulting from Regulation No 2498/74 should not be applied to units of account which became payable prior to the date of its entry into force.

For the rest, he refers to the written observations submitted to the Court by the Commission of the European Communities.

C — The Commission of the European Communities first of all sets out the features of the system of aid for the private storage of butter and cream, which is intended to counteract seasonal price fluctuations by a temporary withdrawal from the market, and which is to be contrasted with the system of purchase by intervention agencies.

After having stated in particular the criteria underlying the calculation of the amount of aid fixed by the Commission, the Commission points out that by virtue of Article 29 of Regulation No 685/69 as amended by Regulations Nos 880/69, 1064/69 and 603/70, that amount shall be altered with reference to any changes in the buying-in price for butter which is in store at that moment. That article in its original form, which provided only for an increase in the amount of the aid, sought to compensate the storer for a proposed reduction in the intervention price for butter. It was thus felt right that an aid whose amount had been calculated on the basis of foreseeable price trends should be recalculated in the event of an act by the Community which affected prices either by way of a decrease, as originally envisaged, or of an increase, as subsequently included. In the one case, the expected profit of the storer on the total operation would be unexpectedly diminished, and in the other it would be unexpectedly increased. Thus amendments taking account of these requirements were made to that regulation in 1970, when the limitation to one marketing season was removed (Regulation No 603/70 of the Commission of 31 March 1970, Official Journal, English Special Edition 1970 (I), p. 169) and in 1974, by Regulation No 2517/74 which added thereto the provisions at issue in this case. It might be argued that even without such express provisions Article 29 is to be interpreted in the same sense, since its objectives are precisely to compensate the storer under contract for Community price changes which might adversely affect his position in the market at the end of the storage period, or vice versa.

In fact, the motivation stated in Regulation No 2517/74 does show that the regulation is to be regarded as bringing about a material change in the application of Article 29. This view is consistent with that taken by the Council in November 1973 when, on the proposal of the Commission, it decided the measures to be taken following the revaluation of the Dutch guilder. Among these measures was an authorization to the Netherlands to grant for stocks of butter and of cream, which at the date of the decision by the Dutch authorities to revalue the guilder by 5 % were subject to storage contracts concluded with the intervention agency, a special aid intended to counteract the loss which resulted from the application of the new representative exchange rate for the Dutch guilder decided by the Council. At that time the view was taken by the Community authorities that Article 29, as it was then drafted, could not properly be interpreted so as to give the Dutch storer under contraa an automatic right to increase in the aid payable as a result of the effective decrease in the buying-in price, as expressed in guilders, resulting from the conversion rate change, and that some other action was therefore required in order to compensate the storer.

A further point of interest is the date of entry into force of Regulation No 2517/74 which, having been adopted on 3 October 1974 and published on 4 October, entered into force on 1 October 1974. The reason for choosing that date is simply that 1 October 1974 had been proposed by the Commission for the entry into force of the new representative rates for the United Kingdom and Irish pounds.

To complete the picture of Article 29 of Regulation No 685/69, mention should finally be made of the amendment brought about, subsequent to the events which have given rise to the present case, by Regulation No 837/75 of the Commission of 26 March 1975 (Official Journal 1975 L 79, p. 52). This regulation provides that any additional amount added to the buying-in price prior to the application of a new buying-in price is to be regarded as a price increase within the meaning of the aforesaid Article 29 with a consequent reduction in the amount off private storage aid. It is clear that the objective of this amendment is the same as that of the amendment brought about by Regulation No 2517/74, that is, to take away the supplementary advantage to the storer of an increase in price he would receive at the end of the storage period.

After stating this, the Commission briefly describes the system of the monetary measures concerning this case, in particular the system of ‘representative rates’, which apply only in the agricultural sector and establish the relationship between the unit of account and a national currency as well as between the different national currencies.

After outlining the functioning and the origin of such system, the Commission points out that any amendment to the representative rate has the effect of changing the level of agricultural prices within the Member State concerned, up in the case of a devaluation of the representative rate, down in the case of a revaluation. In order to mitigate the disadvantages associated with revaluation, consisting in particular in the case of Member States with stronger currencies in a reduction of agricultural prices, it has recently become customary for ‘revaluation’ to take effect at the same time as the beginning of the marketing year, since the review of agricultural prices expressed in units of account, which takes place at that time, usually involves their being increased and can thus compensate for the reduction in price due to the effect of a revalued representative rate.

The increase in agricultural prices effected by Regulation No 2496/74 of the Council which is at issue in this case is exceptional since it contravened one of the principles of the common organization of the agricultural markets, which is based on an annual price review on the basis of which producers and traders can make their forecasts and plans for the whole year. The reasons for that review, involving for Ireland an increase in the price of butter expressed in units of account, are clearly set out in the recitals to Regulation No 2496/74. The fact that this regulation was made to apply on the same day as Regulation No 2498/74, fixing a new representative conversion rate for the Irish pound, shows that the devaluation measure contained in the latter provision is to be seen as linked to the general price increase and as having, at least in part, the same objectives — namely the increasing of prices for Irish agricultural produce to take account of the exceptional difficulties mentioned in Regulation No 2496/74 in the sphere of agriculture, which were aggravated in the case of Irish producers by the exceptional depreciation of their currency over the period 1973/1974.

After setting out these considerations, the Commission endeavours to reply to the questions referred for a preliminary ruling by the Irish court. Referring to the first two questions, which it considers can suitably be dealt with together, the Commission observes that according to the analysis already made, the change in the representative rate brought about by Regulation No 2498/74 did involve an increase in the buying-in price under Article 29 of Regulation No 685/69. It emerges from that analysis that hitherto the Commission has adopted a restrictive interpretation of the said article, in that prior to that regulation, a change in the national buying-in price brought about by a change in the representative rate was not considered to be a change in the buying-in price within the meaning of the aforementioned Article 29. If the Court were minded to adopt a wider interpretation of the expression ‘increase in buying-in price’ used in Article 29, as unamended, the Commission would not contest it, since such interpretation would in its view be consistent with the objectives of the said article, which aims to neutralize for the storer the effects of unforeseeable changes in the price which he will obtain at the end of the storage period which are brought about by Community price decisions. However, in view of the position it has consistently adopted, the Commission feels obliged to argue in favour of a narrower inerpretation of Article 29 of Regulation No 685/69, to the effect that Regulation No 2498/74 results in increasing the buying-in price for butter only by reason of the amendments made by Regulation No 2517/74.

Regarding the third question, the Commission takes the view that Regulation No 2517/74 is to be interpreted as altering the amount of aid to which those storers were entitled who had butter and cream in private storage at the date when the regulation entered into force, and whose aid was payable in a currency whose representative rate was henceforward devalued as a result of Regulation No 2498/74. Any other interpretation would rob Regulation No 2517/74 of all content until the next round of changes in the representative rates, whereas it is clear from the timing of the regulation that it was intended to apply to the effects of the changes in representative rates of 7 October 1974.

Moreover, the various grounds for complaint advanced against Regulation No 2517/74 by the plaintiff in the main action are unfounded.

• Regarding the complaint that the said regulation involved an unwarranted attack on the applicant's rights, it is sufficient to observe that the regulation was both warranted and just, since a change in the buying-in price brought about by an amendment to the representative rate and a change in the same price as expressed in units of account both have the same effects on the rights of the storer as provided for by Article 29. The objective of that provision is to prevent storers of butter and cream under contracts with intervention agencies from incurring unforeseeable changes or benefits as a result of price changes brought about by Community legislation (Cf. Annex II to the Written Observations of the Commission).

• Regarding the complaint based on the argument that Regulation No 2517/74 has retroactive effects, the Commission points out that it adopted the regulation in the belief that the regulation of the Council changing the representative rate would enter into force on 1 October 1974 in accordance with the Commission's proposal, and that therefore it was expedient to appoint the same date for the entry into force of Regulation No 2517/74. Moreover, this element cannot affect the applicant's position in any way, since a storer could have grounds for complaining of the retroactive effects of the said regulation only if the devaluation had taken place on 1 October and the goods had been removed from storage between 1 and 4 October.

• Regarding the complaint of interference with vested rights, the Commission begins by analysing the storage contracts concluded in this case, in particular Conditions Nos 10 to 13 and No 17 thereof. It emerges from that analysis, first, that on 4 October 1974, for three of the contracts, concerning butter put into storage in the period between July and September, the basic condition relating to the minimum storage period had not yet been fulfilled, and that on that date it is possible, but not probable, that that condition was fulfilled for the other two contracts, concerning butter which went into storage during June. Again, even assuming that condition to have been fulfilled, it would be most consistent with the case-law of the Court regarding ‘vested rights’ to conclude that the applicant had no effective right under any of its contracts to be paid a particular sum by way of the aid at issue unul the quantities in question had been removed from storage.

• Regarding the argument to the effect that on the facts of this case the applicant was deprived of a benefit which it was reasonably entitled to expect, it is contended that that argument runs counter to the case-law of the Court, in particular the principle stated by the Advocate General in Joined Cases 95 to 98/74 [1975] ECR 1615 at p. 643. The manifest object of Article 29 of Regulation No 685/69 is the neutralization of ‘any’ advantage or disadvantage accruing to private storers as a result of a change in the intervention price. Although that objective is not explicitly stated, storers could not reasonably expect that the philosophy underlying the aforementioned provision would not also be applied in the case of a change in the intervention price as expressed in national currency. All the more so since, as has been pointed out, measures had been taken in 1973 to compensate Dutch storers for the effects of the revaluation of the Dutch guilder on the prices which they could expect to receive at the end of their storage period.

• Furthermore, regarding the complaint based on infringement of fundamental rights, first, in the present case it is by no means clear what is the fundamental right which, in the applicant's submission is infringed by a Community measure having the effect of reducing to nought a Community aid to which the applicant claims to be entitled. Secondly, it must not be forgotten that even where such rights exist, they are subject to certain limits, and that in any event, the guarantees given by virtue of such rights cannot be extended to protect mere commercial interests or opportunities, involving an element of risk which is of the essence of economic activity.

The Commission also rejects the complaint of misuse of powers, basing itself on the general considerations already set out and pointing out that, according to the calculations set out in Annex II to its Written Observations, the financial position of storers in the applicant's situation is more favourable than it was prior to the devaluation of the Irish pound, when the reduction of the aid in question to nought is also taken into account. The Commission further points out that a measure such as the one at issue in this case, by its content and by its purpose, falls within the measures which it has the power to adopt pursuant to the delegation of powers contained in Article 6 (7) of Regulation No 804/68 of the Council, and therefore does not involve a misuse of powers.

Finally the Commission rejects the complaint of an insufficient statement of reasons, basing itself on the case-law of the Court and observing that the statement of reasons in Regulation No 2517/74 is not inadequate to the degree that the applicant could not in the circumstances of this case discern the reasons and objectives of the said regulation or that the Court would not be in a position to review the legality of the regulation.

With regard to the fourth question, the Commission states that, in view of its argument set out above to the effect that no aid is payable in this case, it is not obliged to supply an answer. In so far as it may be of interest, the Commission puts forward the view that, in the case of butter which is in store under contract at the date of entry into force of a new representative rate, the entire aid is to be paid at the new rate. In particular, the Commission considers that, since the amount due as aid can be amended under Article 29 of Regulation No 685/69 right up to the date of removal from store, the aid is not ‘due and payable’ until that date.

On the basis of these observations, the Commission proposes that the questions referred for a preliminary ruling should be answered as follows:

1. Article 29 of Regulation No 685/69 of the Commission of 14 April 1969 on detailed rules of application for intervention on the market in butter and cream as amended by Regulation No 2517/74 is to be interpreted in the sense that an increase in the buying-in price of butter expressed in Irish pounds was brought about by Regulation 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.

2. Examination of the questions raised has not revealed any factor capable of affecting the validity of Regulation No 2517/74 of the Commission of 3 October 1974 amending Regulation No 685/69 as regards adjustment of private storage aid for butter to take account of changes in the buying-in price.

3. Regulation No 2517/74 is to be applied to butter and cream subject to contracts relating to private storage which was in store on 3 October 1974.’