Court of Justice 28-10-1982 ECLI:EU:C:1982:369

I — Facts and written procedure

The Offene Handelsgesellschaft in Firma Werner Faust [commercial partnership, trading as Werner Faust] (hereinafter referred to as “Faust”) is an undertaking which carries on business in the Federal Republic of Germany as an import agency on cif terms. A substantial part of its business consists in importing preserved mushrooms from Taiwan for the account of principals.

Preserved mushrooms come within the common organization of the market in products processed from fruit and vegetables established by Regulation (EEC) No 865/68 of the Council (Official Journal, English Special Edition 1968 (I), p. 225). That regulation authorized the Commission to adopt, inter alia, protective measures where imports of products from nonmember countries threatened to disrupt the Community market.

Such measures were adopted for the first time in 1974 by means of Regulation No 2107/74 of the Commission of 8 August 1974 (Official Journal, 1974, L 218, p. 54) which made all imports of preserved mushrooms from nonmember countries subject to the submission of an import licence. That licence was issued to the party applying therefor for a quantity which was calcul.ued by reference to the quantity ot products which that party had imported in the corresponding month of the preceding year or by reference to the average quantity imported during the three preceding years. Article 1 (4) of tliat regulation expressly excluded from that reference system imports from nonmember countries which stated their willingness to give certain guarantees, in particular that they would observe a certain minimum level of prices and that they would prevent any deflection of trade.

Towards the end of 1976, the Commission, considering that the pressure from imports had eased, adopted Regulation (EEC) No 3096/76 of 17 December 1976 (Official Journal 1976, L 348, p. 26) relaxing those protective measures.

On 14 March 1977 the Council adopted Regulation (EEC) No 516/77 which codified and supplemented the basic provisions on the common organization of the market in products processed from fruit and vegetables (Official Journal 1977, L 73, p. 1). Article 14 (2) of that regulation authorizes the Commission to adopt, inter alia, the necessary measures in a case where the market is threatened by serious disturbances. The detailed rules for the application of those measures were adopted by Council Regulation (EEC) No 521/77 of 14 March 1977 (Official Journal 1977, L 73, p. 28) Article 2 whereof enumerates the protective measures applicable with regard to imports from nonmember countries, providing in particular that those measures may “be restricted to products imported from or originating in particular countries, to exports to particular countries or to particular qualities or types of presentation”. Article 3 of that regulation provides that its application is to respect the Community's obligations under international agreements.

Pursuant to Regulation No 516/77, the Commission adopted on 25 May 1978, by means of Regulation (EEC) No 1102/78 (Official Journal 1978, L 139, p. 26), fresh protective measures consisting in the immediate suspension of the issue of import licences for mushrooms. Under the terms of Article 2 (1) of that regulation the import ban was not to apply to “preserved mushrooms originating in third countries which the Commission accepts as being able to ensure that their exports to the Community do not exceed a level agreed by the Commission”. Article 3 stated that the People's Republic of China was to benefit under the terms of Article 2.

By Regulation (EEC) No 1213/78 of 5 June 1978 (Official Journal 1978, L 150, p. 5) the Commission also excluded Taiwan from the application of the protective measures. That regulation was, however, almost immediately repealed by Commission Regulation (EEC) No 1449/78 of 28 June 1978 (Official Journal 1978, L 173, p. 25). The Commission argues that it was once again obliged to extend the protective measures to apply to Taiwan on account of a substantial and unforeseen increase in applications for import certificates in respect of preserved mushrooms from that country.

In 1979, import certificates were issued solely to the People's Republic of China, which had undertaken to restrict its exports to the Common Market to 20 000 tonnes and, towards the end of the year, to South Korea which had agreed to restrict its exports to the Community to 1 500 tonnes. Taiwan, which had refused to accept a quota of 1 000 tonnes, was only able to place on the common market 400 tonnes which were already in German customs authorities' warehouses.

Similarly, in 1980, the protective measures remained applicable to all nonmember countries with the exception of the People's Republic of China and South Korea, until 4 March 1980, when, by the adoption of Regulation (EEC) No 547/80 of that date (Official Journal 1980, L 60, p. 16) the Commission relaxed those protective measures and, in respect of countries which in 1977 and 1978 had exported small tonnages to the Community, authorized the issue of import licences up to a limit of 10% of the total quantities imported in 1977 and 1978. That scheme was not however applied to Taiwan. Taiwan eventually agreed to restrict to 1 000 tonnes its deliveries of preserved mushrooms in the Community in 1980 and, as a result, import licences were finally issued up to that quantity in respect of products from that country.

More recent Community legislation then reduced imports of preserved mushrooms from Taiwan from 14 727,2 tonnes, the figure for 1978, to a negligible quantity (55.3 tonnes) in 1979 and 1 000 tonnes in 1980.

Faust, which in 1978 had received commission of DM 117 593 in respect of imports of 396 128 cartons of Taiwanese mushrooms, imported none in 1979. The quantity of imports in 1980 is not stated but it may be supposed that the same situation occurred in that year.

It claims to have suffered substantial damage (which it specifies in its conclusions) and to have been unable to mitigate that damage by participating in the new patterns of trade established with the People's Republic of China since that country deals exclusively with two or three large importers and, moreover, refuses for political reasons to enter into business relations with undertakings which also market products from Taiwan.

Faust is of the opinion that the losses which it suffered in 1979 and 1980 are the result of Community regulations on the importation of mushrooms, in particular Commission Regulation (EEC) No 3096/76 of 17 December 1976, Commission Regulation (EEC) No 1102/78 of 25 May 1978 and Commission Regulation (EEC) No 1449/78 of 28 June 1978.

Since those regulations are in its view unlawful it considered that it was entitled to bring an action for damages against the Community under the second paragraph of Article 215 of the EEC Treaty and it did so by application lodged at the Court Registry on 10 March 1980.

On 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. However, it requested Faust to produce certain telex messages which Faust had mentioned in its reply.

By order of 26 October 1981 the Court decided, pursuant to Article 95 (1) and (2) of the Rules of Procedure, to assign the case to the First Chamber.

II — Conclusions of the parties

Faust claims that the Court should :

• Order the defendant to pay to the applicant the sum of USD 114 930 plus interest at the rate of 4% from the date of lodging of the application;

• Order the defendant to pay the costs.

The Commission contends that the Court should:

• Dismiss the application;

• Order the applicant to pay the costs.

III — Submissions and arguments of the parties

Faust, in assessing the damages which it is claiming, argues that if the trend of imports had continued normally, and in particular if the reference system had been maintained in force, it might have expected its share of imports of preserved mushrooms from Taiwan to reach 19.12%. For each of the two years 1979 and 1980 that would have amounted to 292 380 cartons, that is to say 2 600 tonnes, for which it would have received in each year commission amounting to USD 57 465, making at total of USD 114 930.

Faust then sets out the reasons for its view that the new regulations relating to the grant of import certificates are illegal. It observes that, in adopting Regulation No 3096/76, the Commission abandoned the former reference system which had applied until then without exception and was based on Article 3 of Regulation (EEC) No 2107/74. Faust says that the abandonment of the reference system contravenes the legal principles embodied in Community law requiring equality of treatment and the prohibition of discrimination. The area covered by the prohibition of discrimination, which stems from the general principle of equality, likewise extends to the various industrial and commercial sectors and thus also to the applicant import agency.

In Faust's view, there was no objective reason justifying the abandonment of the reference system mentioned above which was based on the principle of equal treatment. A substantial proportion of the total imports of mushrooms came from the People's Republic of China during the years 1974, 1975 and 1976 and therefore an adequate basis of reference existed, which could also be used in the future, in order to enable all the traditional supplier countries to have a reasonable and equitable share in the remaining imports into the European Economic Community. However, instead of bringing about a proportionate reduction in imports from the various nonmember countries, the Commission entirely excluded Taiwan from the issue of export certificates. The overriding reason for the change in the regulations, which favoured imports from the People's Republic of China, was to establish commercial relations on a larger scale with that country. Faust considers nevertheless that such a reason cannot justify regulations which are incompatible with superior rules of Community law such as the prohibition of discrimination. It adds that the nullity of Regulation No 3096/76 necessarily entails the nullity of all the successive measures which refer to that regulation.

Faust then observes that Regulation No 1213/78 of 5 June 1978, in which the Commission stated that Taiwan was also able to ensure that its exports to the Community would not exceed the level agreed by the Commission, was repealed very shortly afterwards by Regulation No 1449/78 of 28 June 1978. The very short lapse of time between the two regulations alone demonstrates that the Commission did not act on the basis of a detailed consideration of the situation but that political considerations alone prompted the decision which once again banned all imports from Taiwan.

Faust points out further that in 1979 the People's Republic of China emerged as the sole supplier of preserved mushrooms and that in 1980, of a total of 29 000 tonnes of mushrooms to be imported into the Community, merely 1 000 tonnes from Taiwan were allowed, that is to say about 3% of the total, whilst in the years 1975 to 1978 exports from Taiwan had reached an average level of almost 13 000 tonnes per annum. Under those circumstances, the quantities allocated to Taiwan in 1979 and 1980 amount very clearly to discrimination against Community traders marketing Taiwanese preserved mushrooms.

Whilst recognizing that Community law does not necessarily protect all commercial relationships, all “know-how” or in general terms all the goodwill of an undertaking, Faust considers nevertheless that it does protect the assets of an established undertaking which have been built up over the years. Amongst those assets must also be included commercial relationships of long standing such as those entered into by Faust with Taiwan.

Faust considers finally that the Commission has also contravened the principle of proportionality, since it could have avoided disturbances of the market simply by applying quantitative restrictions calculated on the basis of the reference system established by Regulation No 2107/74, and is also in breach of the principle of the protection of legitimate expectation since the unjustified abandonment of the reference system was entirely unforeseeable by the applicant.

The Commission of the European Communities states that, using the powers delegated to it by the Council, it has sought, as the development of Community law between 1974 and 1980 clearly shows, to tackle the problem posed by the pressure exerted on the market by constantly fluctuating imports and also to eliminate the disturbances brought about by that phenomenon. If the result has been a deflection in patterns of trade in favour of the People's Republic of China, that is due, on the one hand, to that country's decision to agree, at an early stage, to take the necessary measures of voluntary restraint and, on the other hand, to a change in the commercial policy of the Council with regard to the People's Republic of China.

According to the Commission, the applicant's claim is unfounded in the absence of any breach of a superior rule of law. The rules of law falling to be considered in this case are certain principles of international law and certain general principles contained in Community law.

As far as principles of international law are concerned, it is hard to see which rule of law could have been broken. No treaty exists between the Community and Taiwan. Taiwan is not a party to GATT and could thus not rely on any provisions of that agreement. Finally, international law contains no general prohibition of discrimination in relations between those to whom it applies. It should also be added that none of those principles of international law can confer on individuals rights on which they may rely before national courts or the Court of Justice.

Nor are the protective measures adopted by the Commission in breach of superior rules of Community law. The Council regulations, which constitute the legal foundation for those measures, permit them to be applied selectively provided that the Community's international commitments are respected. Moreover, the EEC Treaty contains “no general principle obliging the Community, in its external relations, to accord to third countries equal treatment in all respects”.

It is stated in the penultimate recital in the preamble to the basic regulation, Regulation No 516/77 mentioned above, that “the common organization of the market in products processed from fruit and vegetables must take appropriate account, at the same time, of the objectives set out in Articles 39 and 110 of the Treaty”. The need to take into account the commercial policy mentioned in Article 110 is moreover confirmed, by implication, in Article 39 (2) which states that “in the Member States agriculture constitutes a sector closely linked with the economy as a whole”, with the result that the common agriculture policy cannot be viewed independently of external commercial policy. The applicant is certainly justified in taking the view that the best reference system is one which distorts competition the least but it should not be forgotten that the Treaty gives the institutions the margin of discretion which they need to adapt decisions of commercial agricultural policy to the changing circumstances of general policy. If Community institutions enjoy a large measure of discretion in the decisions of economic policy which they are required to take, it stands to reason that they should enjoy such discretion in the sphere of external trade the development of which does not unilaterally depend on the Community authorities.

In adopting protective measures, which do not concern merely Taiwan, the Commission contravened neither the prohibition of discrimination laid down by Community law which rests on the principle of equality, nor the principle of the protection of legitimate expectation nor the principle of proportionality.

No finding of discriminatory treatment affecting the applicant's freedom of manoeuvre in its commercial transactions with nonmember countries is possible in this case. The inconvenience suffered by the applicant stems not from an arbitrary measure adopted by the Commission but is an inevitable consequence, amongst other factors, of the change of direction in the Community's commercial policy made by the Council with regard to the People's Republic of China and Taiwan.

Nor is there a breach of the principle of the protection of legitimate expectation. The contested protective measures would only frustrate the performance of contracts already entered into if those measures were in contradiction with an attitude on the part of the Commission which led the applicant to infer what the future policy of the Community would be in the sphere of external trade. However, the applicant, as a prudent and informed import agent, ought not to have ignored a trend in Community policies the signs of which had been apparent for some time. Every trader operating in the market must constantly expect sudden repercussions from decisions of commercial policy taken by the Community. Traders may not in principle place reliance upon the maintenance of commercial opportunities which their participation in external trade has made available to them. The Community institutions have no obligation to ensure the maintenance of those opportunities.

For the same reasons, it is not possible to see how a breach of the principle of proportionality can be made out. Any change in Community policy in the sphere of external trade inevitably has repercussions on the trade prospects of traders in the sector affected.

In conclusion the Commission considers that its conduct was not unlawful and that it therefore serves no purpose to examine whether its conduct might constitute a sufficiently serious breach of a rule of Community law. Whatever the case may be, in a field partly affected by external relations and possibly by external trade, to establish that such a breach has occurred must be more difficult than in any other field, regard being had to the particularly wide measure of discretion enjoyed by Community institutions.

As regards finally the question whether the applicant has suffered injury in the legal sense of the term, the Commission observes that:

• Interference with longstanding trade relations does not necessarily found a right to compensation for the damage suffered;

• Even if it is acknowledged that there is an obligation to protect importers when a protective measure is adopted, that obligation is at least reduced when the persons concerned, such as import agents, are engaged only indirectly in the trade in question;

• The extent of the damage suffered cannot be calculated by reference to the commission which the trader concerned received in the past, in view of the uncertainties and particular characteristics which are inherent in external trade.

In its reply Faust disputes the accuracy of the factors to which the Commission refers in order to justify the contested regulations.

First it observes that the average delivery price of all quantities of preserved mushrooms imported in 1978 into the Federal Republic of Germany (where 95% of imports of that product into the Community are directed) exceeded the sale price of Community producers by 14.4%.

It then states that the Commission cannot say that Taiwan was not prepared to agree to a restriction of its exports to the Community. In fact the Commission never offered Taiwan any possibility of reaching an agreement on voluntary restraint on any tolerably acceptable basis.

As regards the increase in the applications for import certificates which led the Commission to reinstate on 28 June 1978 the protective measure previously adopted against Taiwan, Faust emphasizes that under the system for the issue of certificates applicable in 1978, the quantities shown in the certificates issued in respect of a given nonmember country provided no guarantee that those quantities would actually be imported from that country since the supplier country could subsequently be altered.

Finally, it points out that the Commission resorted to protective measures in May 1978 after promising South Korea import certificates for quantities which exceeded by 350% imports originating in that country in the three preceding years and after authorizing the People's Republic of China to supply a quantity which exceeded by 20% the quantity supplied in 1977. However, imports from Taiwan constituted only a small portion (no more than approximately 13%) of total imports in 1978.

On the basis of those considerations Faust maintains that the objective pursued by the Commission's policy was manifestly not to eliminate disturbances of the market but to ensure that the People's Republic of China became the almost exclusive supplier of preserved mushrooms in the common market. That is demonstrated by the very accommodating treatment that the Commission accorded the People's Republic of China in 1979. In fact, although the agreement on voluntary restraint entered into between the Community and China concerned a quantity of 20 000 tonnes, the Commission permitted during 1979 imports of Chinese mushrooms into the Community amounting in total to approximately 29 600 tonnes.

In Faust's view, the Commission thus knowingly used for a purpose other than that for which it was intended a political instrument of market organization which it had created for itself by combining a reference system and agreements on voluntary restraint and, although purporting to adopt a measure for the organization of the market, it operated an external trade policy. Its conduct clearly demonstrates that it has abused its discretionary power. From that point of view also, the measures adopted by it with the declared intention of eliminating alleged disturbances of the market are thus unlawful.

In its rejoinder, the Commission seeks to show that, contrary to the applicant's assertion, the protective measure of 25 May 1978 was adopted on the basis of a correct assessment of the information in the possession of the competent authority.

The factors to be taken into consideration for the assessment of the need for a protective measure are as follows :

• the volume of imports effected or foreseeable;

• the availability of products on the Community market;

• the trend of market prices of Community products;

• the price of products coming from nonmember countries.

As regards the volume of imports the Commission foresaw, from the applications for import certificates which had been lodged by 23 May 1978, that imports of mushrooms coming from nonmember countries would reach, by the end of July, a total of 40 941 tonnes, that is to say, a quantity greatly in excess of the total for the preceding year. Official statistics drawn up after the end of 1978, which give a figure of 45 951, prove that the Commission's estimate was correct. Moreover, there is no doubt that that figure would have been greatly exceeded if no protective measures had been adopted.

That finding is in no way altered by the fact that during 1978, in relation to total imports, slight differences appeared between the figures relating to import certificates issued and the figures relating to quantities actually imported.

As far as the level of stocks is concerned, the Commission observes that there is no dispute on this point between it and the applicant.

That is not the case with regard to the development of market prices for Community products.

The Commission in fact stated in the third recital in the preamble to Regulation No 1102/78 adopting protective measures that, for a large quantity of the nonmember country products “the offer prices ... are 20 to 30% less than the cost price in the Community preservedmushroom industry”.

Official statistics from the Federal German Office for Statistics, produced by the applicant, show on the other hand for 1978 an average sale price of DM 3. 916 per kg for all the quantities imported into the Federal Republic of Germany from nonmember countries and an average sale price of DM 3. 423 per kg for quantities coming from other Member States.

Challenging those figures, the Commission states that:

• The prices recorded in 1978 result from the massive and constant pressure which goods produced in the Community have suffered since 1977 following an increase of imports from nonmember countries;

• The cost price of French mushrooms, calculated by the Commission on the basis of information in its possession, was approximately DM 1.90 to 2.0 per half kilogram for goods of top quality, whereas the offer price for mushrooms from outside the Community was from DM 1.40 to 1.60 per half kilogram box for goods of top quality;

• Annual statistics take into account all the products for the whole of the year whereas the Commission based its figures solely on the prices of a significant part of the products at a given date (end of May 1978);

• Annual statistics take account of customs duties (23%), whereas the Commission bases its figures on offer prices in nonmember countries, excluding customs duties;

• Sale prices may sometimes be lower than the cost price particularly in cases such as this where production in the Community had to compete with offers of large quantities of low-priced mushrooms from nonmember countries.

Finally the Commission disputes two secondary arguments put forward by the applicant.

As regards the argument that the information relating to the market in question is not reliable owing to the system of import certificates in force in 1978, the Commission considers that the decisive fact is that even if the uncertainties as to the volume of imports could be resolved completely in favour of the applicant that would not alter the position in such a way that the Commission could be criticized for having taken a decision which was not justified by the situation on the market.

As to the argument relating to the different treatment which was accorded to the People's Republic of China on the one hand and Taiwan on the other, the Commission considers that it was in no way bound to offer every nonmember country, within the framework of the negotiations leading to voluntary restraint, a quota calculated by reference to the imports from that country in the preceding years. On the contrary it was obliged to respect the international commitments entered into by the Council. In that respect it quotas the commercial agreement entered into on 3 April 1978 between the Community and the People's Republic of China under which the contracting parties undertook to make every effort “to foster the harmonious expansion of their reciprocal trade”.

The Commission admits that imports from the People's Republic of China in 1979 exceeded by 7 000 tonnes the ceiling of 22 500 tonnes fixed for that country. That is, however, due solely to the fact that when the new protective measures were adopted, on 20 July 1979, 7 000 tonnes more than the quantities provided for had already been shipped from the People's Republic of China and it was therefore necessary to take them into consideration.

IV — Oral procedure

Faust, represented by D. Mańkowski, and the Commission of the European Communities, represented by M. Hilf, a member of its Legal Department, acting as Agent, presented oral argument at the sitting on 14 January 1982.

The parties expressed differing opinions inter alia on the question whether negotiations leading to an agreement on voluntary restraint took place between the Community and Taiwan in 1978.

In addition, the Commission raised certain questions as to the admissibility of the application inasmuch as it was not certain whether Faust could have brought the matter before a national court in the first instance.

The Advocate General delivered his opinion at the sitting on 27 May 1982.

Costs

29 Under Article 69 (2) of the Rules of Procedure an unsuccessful party is to be ordered to pay the costs. Since the applicants has failed in its submissions it must be ordered to pay the costs.