Summary
Parties
Subject of the case
Grounds
Decision on costs
Operative part
Keywords
1 . AGRICULTURE - COMMON ORGANIZATION OF MARKETS - CEREALS - PREMIUM FOR THE DENATURING OF CEREALS OF BREAD-MAKING QUALITY - CONDITIONS GOVERNING THE GRANT - METHODS OF DENATURING - STRICT COMPLIANCE WITH THE RULES LAID DOWN
( REGULATION NO 172/67 OF THE COUNCIL , ART . 4 ( 2 ); REGULATION ( EEC ) NO 1403/69 OF THE COMMISSION , ANNEX I )
2 . AGRICULTURE - COMMON ORGANIZATION OF MARKETS - CEREALS - PREMIUM FOR THE DENATURING OF CEREALS OF BREAD-MAKING QUALITY - DENATURING OPERATIONS - DETAILED RULES FOR SUPERVISION - DISCRETION OF THE NATIONAL AUTHORITIES
( REGULATION NO 172/67 OF THE COUNCIL , ART . 7 ; REGULATION ( EEC ) NO 1403/69 OF THE COMMISSION , ART . 4 ( 3 ))
3 . MEASURES ADOPTED BY THE INSTITUTIONS - REGULATIONS - IMPLEMENTATION BY MEMBER STATES - FORMAL AND PROCEDURAL RULES OF NATIONAL LAW - CONDITIONS GOVERNING APPLICATION
4 . AGRICULTURE - COMMON AGRICULTURAL POLICY - FINANCING BY EAGGF - DUTY OF MEMBER STATES TO RECOVER SUMS UNDULY AND IRREGULARLY GRANTED - DISCRETION - ABSENCE - EQUAL TREATMENT OF UNDERTAKINGS - UNIFORM APPLICATION OF COMMUNITY LAW
( REGULATION NO 729/70 OF THE COUNCIL , ART . 8 ( 1 ))
Summary
1 . IN THE CASE OF DENATURING BY COLOURING ONLY THE STANDARD METHOD DEFINED BY ANNEX I TO REGULATION NO 1403/69 MAY BE USED . A DENATURING PREMIUM GRANTED ON THE BASIS OF ARTICLE 4 ( 2 ) OF REGULATION NO 172/67 MUST BE REGARDED AS WRONGLY PAID IF THE RULES FOR THE USE OF THAT METHOD HAVE NOT BEEN COMPLIED WITH .
IN THE CASE OF DENATURING BY METHODS OTHER THAN THE COLOURING METHOD WHICH MAY BE PRESCRIBED BY NATIONAL LAW , THE RULES GOVERNING THOSE METHODS MUST BE COMPLIED WITH IN FULL IF THE DENATURING OPERATION IS TO CONFER ENTITLEMENT TO THE PREMIUM .
2 . COMMUNITY LAW IN ITS PRESENT STATE DOES NOT RESTRICT TO A SPECIFIC METHOD THE SUPERVISION , BY THE COMPETENT AUTHORITIES OF THE MEMBER STATES , OF THE REGULARITY OF DENATURING OPERATIONS CONFERRING ENTITLEMENT TO PAYMENT OF THE PREMIUM . SUPERVISION MAY INTER ALIA TAKE THE FORM OF AN AUDIT OF THE ACCOUNTING RECORDS . IT IS FOR THE COMPETENT NATIONAL AUTHORITIES TO DETERMINE , SUBJECT TO REVIEW BY THE NATIONAL COURTS , WHAT PROBATIVE VALUE IT IS APPROPRIATE TO ATTRIBUTE TO THE RESULTS OF THE VARIOUS TYPES OF SUPERVISION TO WHICH DENATURING OPERATIONS ARE SUBJECT .
3 . WHERE THE IMPLEMENTATION OF A COMMUNITY REGULATION IS A MATTER FOR THE NATIONAL AUTHORITIES SUBJECT TO REVIEW BY THE NATIONAL COURTS , IMPLEMENTATION MUST COMPLY WITH THE PROCEDURAL AND FORMAL RULES PRESCRIBED BY THE NATIONAL LAW OF THE MEMBER STATE CONCERNED . HOWEVER , RECOURSE TO RULES OF NATIONAL LAW IS POSSIBLE ONLY IN SO FAR AS IT IS NECESSARY FOR THE IMPLEMENTATION OF PROVISIONS OF COMMUNITY LAW AND IN SO FAR AS THE APPLICATION OF THOSE RULES OF NATIONAL LAW DOES NOT JEOPARDIZE THE SCOPE AND EFFECTIVENESS OF THAT COMMUNITY LAW .
4 . ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 CONCERNING THE RECOVERY BY THE MEMBER STATES OF SUMS LOST AS A RESULT OF IRREGULARITIES , EXPRESSLY REQUIRES THE NATIONAL AUTHORITIES RESPONSIBLE FOR OPERATING COMMUNITY MACHINERY FOR AGRICULTURAL INTERVENTION TO RECOVER SUMS UNDULY OR IRREGULARLY PAID ; AND SUCH AUTHORITIES , ACTING ON BEHALF OF THE COMMUNITY , MAY NOT , ON SUCH OCCASIONS , EXERCISE A DISCRETION AS TO THE EXPEDIENCY OF DEMANDING REPAYMENT OF COMMUNITY FUNDS UNDULY OR IRREGULARLY GRANTED . THE OPPOSITE INTERPRETATION WOULD LEAD TO AN EROSION BOTH OF THE PRINCIPLE OF EQUAL TREATMENT BETWEEN UNDERTAKINGS FROM DIFFERENT MEMBER STATES AND OF THE APPLICATION OF COMMUNITY LAW WHICH MUST , SO FAR AS POSSIBLE , REMAIN UNIFORM THROUGHOUT THE COMMUNITY .
Parties
IN JOINED CASES 146 , 192 AND 193/81
REFERENCE TO THE COURT UNDER ARTICLE 177 OF THE EEC TREATY BY THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ) FRANKFURT AM MAIN FOR A PRELIMINARY RULING IN THE PROCEEDINGS PENDING BEFORE THAT COURT BETWEEN
BAYWA AG , MUNICH ( FEDERAL REPUBLIC OF GERMANY ),
RAIFFEISENBANK UNTERSPIESHEIM UND UMGEBUNG E.G ., UNTERSPIESHEIM ( FEDERAL REPUBLIC OF GERMANY ),
AND
RAIFFEISENBANK BUTTHARD E.G ., BUTTHARD ( FEDERAL REPUBLIC OF GERMANY ) - CASE 146/81 -
RAIFFEISEN HAUPTGENOSSENSCHAFT E.G ., HANOVER ( FEDERAL REPUBLIC OF GERMANY ) - CASES 192 AND 193/81 -
PLAINTIFFS ,
AND
BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG ( FEDERAL OFFICE FOR THE ORGANIZATION OF AGRICULTURAL MARKETS ), FRANKFURT AM MAIN ( FEDERAL REPUBLIC OF GERMANY ),
DEFENDANT ,
AND
RHENUS AG , MANNHEIM ( FEDERAL REPUBLIC OF GERMANY ),
PARTY CALLED BY THE COURT IN THE MAIN ACTION WHICH GAVE RISE TO CASE 146/81 ,
Subject of the case
ON THE INTERPRETATION OF : ARTICLES 4 ( 2 ) AND 2 ( 1 ) OF REGULATION ( EEC ) NO 172/67 OF THE COUNCIL OF 27 JUNE 1967 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1967 , P . 139 ), ARTICLES 4 ( 3 ) AND 5 OF REGULATION ( EEC ) NO 1403/69 OF THE COMMISSION OF 18 JULY 1969 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 , P . 345 ) AND ARTICLE 8 OF REGULATION ( EEC ) NO 729/70 OF THE COUNCIL OF 21 APRIL 1970 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1970 ( I ), P . 218 ),
Grounds
1 BY THREE ORDERS DRAFTED IN IDENTICAL TERMS ON 30 APRIL 1981 , RECEIVED AT THE COURT REGISTRY ON 9 AND 25 JUNE 1981 , THE VERWALTUNGSGERICHT ( ADMINISTRATIVE COURT ) FRANKFURT AM MAIN REFERRED THREE QUESTIONS TO THE COURT OF JUSTICE UNDER ARTICLE 177 OF THE EEC TREATY , FOR A PRELIMINARY RULING ON THE INTERPRETATION OF ARTICLES 4 ( 2 ) AND 2 ( 1 ) OF REGULATION NO 172/67 OF THE COUNCIL OF 27 JUNE 1967 ON GENERAL RULES GOVERNING THE DENATURING OF WHEAT AND RYE OF BREAD-MAKING QUALITY ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1967 , P . 319 ), ANNEX I TO REGULATION ( EEC ) NO 1403/69 OF THE COMMISSION OF 18 JULY 1969 LAYING DOWN DETAILED RULES FOR THE APPLICATION OF THE PROVISIONS CONCERNING DENATURING OF COMMON WHEAT AND RYE OF BREAD-MAKING QUALITY ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( II ), P . 345 ), ARTICLES 4 ( 3 ) AND 5 OF THAT REGULATION AND ARTICLE 8 OF REGULATION ( EEC ) NO 729/70 OF THE COUNCIL OF 21 APRIL 1970 ON THE FINANCING OF THE COMMON AGRICULTURAL POLICY ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1970 ( I ), P . 218 ), IN CONNECTION WITH PROCEEDINGS INSTITUTED FOR THE ANNULMENT OF THE DECISIONS ADOPTED BY THE BUNDESANSTALT FUR LANDWIRTSCHAFTLICHE MARKTORDNUNG ( FEDERAL OFFICE FOR THE ORGANIZATION OF AGRICULTURAL MARKETS , HEREINAFTER REFERRED TO AS ' ' THE FEDERAL OFFICE ' ' ) DEMANDING REPAYMENT OF DENATURING PREMIUMS UNDULY GRANTED .
2 BETWEEN 1969 AND 1974 , THE PLAINTIFFS IN THE MAIN ACTIONS , FOUR AGRICULTURAL COOPERATIVES IN THE FEDERAL REPUBLIC OF GERMANY , CARRIED OUT , EITHER BY THEMSELVES OR THROUGH OTHERS , OPERATIONS INVOLVING THE DENATURING OF CEREALS OF BREAD-MAKING QUALITY AS PROVIDED FOR BY REGULATIONS NOS 172/67 AND 1403/69 , IN THE PRESENCE FOR ALL OR PART OF THE OPERATIONS OF INSPECTORS DELEGATED BY THE FEDERAL OFFICE . THE REPORTS DRAWN UP BY THOSE INSPECTORS DO NOT CONTAIN ANY OBJECTIONS . HOWEVER , AFTER AUDITS OF THE ACCOUNTING RECORDS WERE CARRIED OUT , THE FEDERAL OFFICE TOOK THE VIEW THAT THE DENATURING OPERATIONS HAD NOT BEEN CONDUCTED IN ACCORDANCE WITH THE MANDATORY PROVISIONS WHICH IT CONSIDERED TO BE APPLICABLE . IT DEMANDED REPAYMENT OF THE DENATURING PREMIUMS PAID . AN OBJECTION LODGED BY THE PLAINTIFFS IN THE MAIN ACTION AGAINST THOSE DECISIONS TO RECOVER THE PREMIUMS WAS REJECTED AND THE PLAINTIFFS THEREUPON INSTITUTED PROCEEDINGS BEFORE THE VERWALTUNGSGERICHT .
3 IN THE COURSE OF THE PROCEEDINGS , THE VERWALTUNGSGERICHT REFERRED TO THE COURT OF JUSTICE THREE QUESTIONS FOR A PRELIMINARY RULING WHICH WERE DRAFTED AS FOLLOWS :
' ' ( A ) HAS A DENATURING PREMIUM GRANTED ON THE BASIS OF ARTICLE 4 ( 2 ) OF REGULATION ( EEC ) NO 172/67 OF THE COUNCIL OF 27 JUNE 1967 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1967 , P . 139 ) BEEN ALLOCATED UNLAWFULLY ONLY WHEN THE DENATURING OPERATION HAS FAILED TO ACHIEVE THE PURPOSE SPECIFIED IN ARTICLE 2 ( 1 ) OF THE REGULATION OR WHEN THE STANDARD METHOD LAID DOWN IN ANNEX I TO REGULATION ( EEC ) NO 1403/69 OF THE COMMISSION ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1969 ( II ), P . 345 ) HAS NOT BEEN ADHERED TO?
( B)CAN RECOVERY OF THE DENATURING PREMIUM BE BASED ON THE RESULTS OF AN AUDIT OF THE ACCOUNTING RECORDS CARRIED OUT ON COMPLETION OF THE DENATURING PROCESS OR DOES IT FOLLOW FROM ARTICLES 4 ( 3 ) AND 5 OF REGULATION NO 1403/69 THAT THE RESULTS OF EX POST FACTO AUDITS ARE TO BE DISREGARDED? IF EX POST FACTO CHECKS ARE TAKEN INTO ACCOUNT , HOW IMPORTANT ARE THEY IN RELATION TO THE EXERCISE OF SUPERVISION PROVIDED FOR IN ARTICLE 4 ( 3 ) OF REGULATION NO 1403/69?
( C)DOES ARTICLE 8 OF REGULATION ( EEC ) NO 729/70 OF THE COUNCIL OF 21 APRIL 1970 ( OFFICIAL JOURNAL , ENGLISH SPECIAL EDITION 1970 ( I ), P . 218 ) REQUIRE MEMBER STATES IN EVERY CASE TO RECOVER UNLAWFULLY GRANTED DENATURING PREMIUMS OR DOES THE REGULATION ALLOW MEMBER STATES TO LEAVE INDIVIDUAL CASES OF RECOVERY TO THE DISCRETION OF THE COMPETENT AUTHORITIES , IN ACCORDANCE WITH NATIONAL LEGAL PROVISIONS?
' '
4 THOSE QUESTIONS CALL FOR THE FOLLOWING ANSWERS .
FIRST QUESTION
5 ARTICLE 4 ( 2 ) OF REGULATION NO 172/67 PROVIDES THAT THE DENATURING PREMIUM IS TO BE GRANTED AT THE REQUEST OF THE INTERESTED PARTY IF CERTAIN REQUIREMENTS LAID DOWN BY THE SAME REGULATION AND , IN PARTICULAR , THOSE CONTAINED IN ARTICLE 2 ARE SATISFIED . ARTICLE 2 ( 1 ) OF THE REGULATION PROVIDES THAT : ' ' THE METHODS EMPLOYED FOR DENATURING MUST ENSURE THAT DENATURED WHEAT AND RYE CAN NO LONGER BE USED FOR HUMAN CONSUMPTION ' ' AND ARTICLE 2 ( 2 ) THAT : ' ' THESE METHODS MUST BE AT LEAST AS EFFECTIVE AS A STANDARD METHOD TO BE DETERMINED ' ' . THE STANDARD METHOD THUS REFERRED TO WAS DEFINED IN ANNEX I TO REGULATION NO 1403/69 WHICH PROVIDES FOR DENATURING BY THE USE OF A COLOURING AGENT KNOWN AS ' ' PATENTED BLUE V ' ' AND DEFINES ITS CHARACTERISTICS AND INDICATIONS FOR USE . FINALLY , THE SECOND PARAGRAPH OF ARTICLE 1 OF THE REGULATION PROVIDES THAT : ' ' IN THE CASE OF DENATURING BY COLOURING , THE STANDARD METHOD ONLY SHALL BE USED ' ' .
6 IN ITS FIRST QUESTION , THE VERWALTUNGSGERICHT SEEKS A RULING FROM THE COURT ON WHETHER A PREMIUM FOR THE DENATURING OF CEREALS HAS BEEN UNLAWFULLY GRANTED IF THE DENATURED WHEAT AND RYE MAY STILL BE USED FOR HUMAN CONSUMPTION OR IF THE RULES OF THE STANDARD METHOD DETERMINED BY ANNEX I TO REGULATION NO 1403/69 HAVE NOT BEEN ADHERED TO .
7 THE PLAINTIFFS IN THE MAIN ACTION CONTEND THAT ALTHOUGH THE STANDARD METHOD MAY NOT HAVE BEEN STRICTLY ADHERED TO DURING THE DENATURING OPERATIONS CARRIED OUT ON THEIR BEHALF , THE OBJECTIVE LAID DOWN BY THE COMMUNITY LEGISLATION , THAT IS TO SAY THE DENATURING OF CEREALS AND THEIR WITHDRAWAL FROM THE MARKET FOR HUMAN CONSUMPTION , HAS BEEN ACHIEVED . ACCORDINGLY , THERE WAS NO INTENT TO DEFRAUD IN THEIR CONDUCT , AS IS APPARENT FROM THE POSITIVE RESULTS OF THE SUPERVISION EXERCISED DURING THE OPERATION . ACCORDING TO THE PLAINTIFFS IN THE MAIN ACTION , STRICT COMPLIANCE WITH THE STANDARD METHOD DOES NOT CONSTITUTE A CONDITION FOR THE CREATION OF A RIGHT TO THE PREMIUM . THE PREMIUM MUST BE PAID AS SOON AS THE CEREALS CAN NO LONGER BE USED FOR HUMAN CONSUMPTION , IRRESPECTIVE OF THE MEANS USED TO ACHIEVE THAT END .
8 THE COMMISSION AND THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY MAINTAIN , HOWEVER , THAT THE WORDING OF REGULATIONS NOS 172/67 AND 1403/69 AND THE NEED TO APPLY COMMUNITY LAW IN A UNIFORM MANNER SHOW THAT COMPLIANCE WITH THE COMMUNITY STANDARD METHOD OR WITH THE METHODS WHICH MAY REPLACE IT UNDER NATIONAL LAW ON THE CONDITIONS LAID DOWN BY ARTICLE 2 ( 2 ) OF REGULATION NO 172/67 IS MANDATORY .
9 IT IS CLEAR FROM THE VERY WORDING OF THE SECOND PARAGRAPH OF ARTICLE 1 OF REGULATION NO 1403/69 , WHICH HAS ALREADY BEEN QUOTED , THAT IN THE CASE OF DENATURING BY COLOURING , ONLY THE STANDARD METHOD DEFINED BY COMMUNITY LAW MAY BE USED .
10 THOSE PROVISIONS ARE MANDATORY IN NATURE . THEIR NATURE IS , MOREOVER , IN CONFORMITY WITH THE PRINCIPLE CONSISTENTLY REFERRED TO IN THE CASE-LAW OF THE COURT TO THE EFFECT THAT PROVISIONS OF COMMUNITY LAW AND , IN PARTICULAR , OF COUNCIL OR COMMISSION REGULATIONS WHICH CREATE A RIGHT TO BENEFITS FINANCED BY COMMUNITY FUNDS MUST BE GIVEN A STRICT INTERPRETATION . FURTHERMORE , TO DISREGARD THE PROVISIONS OF THE SECOND PARAGRAPH OF ARTICLE 1 OF REGULATION NO 1403/69 WOULD CREATE A TWOFOLD RISK : IN THE FIRST PLACE , AN APPRAISAL OF THE QUESTION WHETHER THE METHODS ADOPTED FOR THE DENATURING OF THE WHEAT OR RYE HAVE RENDERED THE CEREALS UNFIT FOR HUMAN CONSUMPTION MIGHT VARY FROM ONE MEMBER STATE TO ANOTHER AND EVEN WITHIN EACH MEMBER STATE , AND SECONDLY , THE EQUALITY OF STATUS OF UNDERTAKINGS CLAIMING THE GRANT OF A DENATURING PREMIUM FROM THE COMMUNITY FUNDS ADMINISTERED BY THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND ( HEREINAFTER REFERRED TO AS ' ' THE FUND ' ' ) MIGHT BE COMPROMISED .
11 IN THOSE CIRCUMSTANCES , THE ANSWER TO THE FIRST QUESTION RAISED BY THE COURT MAKING THE REFERENCE SHOULD BE THAT A DENATURING PREMIUM GRANTED ON THE BASIS OF ARTICLE 4 ( 2 ) OF REGULATION NO 172/67 MUST , IF THE STANDARD METHOD LAID DOWN IN ANNEX I TO REGULATION NO 1403/69 OF THE COMMISSION IS SELECTED , BE REGARDED AS WRONGLY PAID IF THE RULES FOR THE USE OF THAT METHOD HAVE NOT BEEN COMPLIED WITH .
12 CERTAIN INFORMATION CONTAINED IN THE FILE ON THE CASE LEADS TO THE ASSUMPTION THAT DENATURING BY COLOURING WAS NOT THE ONLY METHOD USED . ACCORDINGLY , IT IS APPROPRIATE TO DETERMINE WHAT EFFECT THE USE OF OTHER METHODS OF DENATURING HAS ON THE RIGHT TO THE PREMIUM .
13 REGULATION ( EEC ) NO 729/70 OF THE COUNCIL OF 21 APRIL 1970 ON THE FINANCING OF THE COMMON AGRICULTURAL POLICY LAYS DOWN IN ARTICLE 8 THE PRINCIPLES ACCORDING TO WHICH THE COMMUNITY AND THE MEMBER STATES MUST ORGANIZE THE IMPLEMENTATION OF COMMUNITY DECISIONS ON AGRICULTURAL INTERVENTION FINANCED BY THE FUND AND COMBAT FRAUD AND IRREGULARITIES IN RELATION TO THOSE OPERATIONS . WITH THAT END IN VIEW , ARTICLE 8 ( 1 ) PROVIDED THAT : ' ' THE MEMBER STATES IN ACCORDANCE WITH NATIONAL PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION SHALL TAKE THE MEASURES NECESSARY TO SATISFY THEMSELVES THAT TRANSACTIONS FINANCED BY THE FUND ARE ACTUALLY CARRIED OUT AND ARE EXECUTED CORRECTLY , PREVENT AND DEAL WITH IRREGULARITIES ( AND ) RECOVER SUMS LOST AS A RESULT OF IRREGULARITIES OR NEGLIGENCE ' ' .
14 IT IS APPARENT FROM THE COMBINED PROVISIONS OF REGULATION NO 729/70 AND ARTICLE 2 OF REGULATION NO 172/67 THAT THE MEMBER STATES ARE AUTHORIZED TO ESTABLISH , UNDER NATIONAL LAW , METHODS OF DENATURING OTHER THAN THE STANDARD METHOD OF DENATURING BY COLOURING ON CONDITION THAT , AS STIPULATED BY THE PROVISIONS OF ARTICLE 2 ( 2 ) OF REGULATION NO 172/67 AND OF THE THIRD PARAGRAPH OF ARTICLE 1 OF REGULATION NO 1403/69 , THE MEANS ADOPTED TO CARRY OUT DENATURING BY A METHOD OTHER THAN COLOURING ARE AT LEAST AS RELIABLE AS THE STANDARD METHOD .
15 FOR THE REASONS SET OUT ABOVE , WHICH REQUIRE STRICT COMPLIANCE WITH THE STANDARD METHOD OF DENATURING BY COLOURING WHERE THAT METHOD IS SELECTED , THE RULES GOVERNING THE OTHER METHODS OF DENATURING WHICH MAY , IF THEY FULFIL THE AFORESAID CONDITIONS , BE PRESCRIBED BY NATIONAL LAW , MUST ALSO , WHERE THOSE METHODS ARE USED , BE COMPLIED WITH IN FULL IF THE DENATURING OPERATION IS TO CONFER ENTITLEMENT TO THE PREMIUM .
SECOND QUESTION
16 ARTICLE 7 OF REGULATION NO 172/67 PROVIDES THAT : ' ' TO QUALIFY FOR THE PREMIUM , DENATURING SHOULD BE EFFECTED IN AGREEMENT WITH THE INTERVENTION AGENCY AND UNDER ITS SUPERVISION ' ' . FOR THE PURPOSES OF THE APPLICATION OF THAT PROVISION , REGULATION NO 1403/69 PROVIDES IN ARTICLE 4 ( 3 ) THAT : ' ' THE GRANTING OF A DENATURING PREMIUM SHALL BE SUBJECT TO SUPERVISION BY THE INTERVENTION AGENCY OF THE PROCESS OF DENATURING OF COMMON WHEAT , OR OF ITS ADMIXTURE , UNALTERED , WITH COMPOUND FEEDINGSTUFFS . . . ' ' FINALLY , ARTICLE 5 OF REGULATION NO 1403/69 SPECIFIES THAT : ' ' THE DENATURING PREMIUM SHALL BE PAID ONLY IF THE CONDITIONS LAID DOWN IN ARTICLE 4 ( 3 ) ARE FULFILLED . ' '
17 IN ITS SECOND QUESTION , THE VERWALTUNGSGERICHT ASKS THE COURT WHETHER THOSE PROVISIONS CONTEMPLATE THE POSSIBILITY OF WITHDRAWING THE DENATURING PREMIUM IN THE LIGHT OF THE RESULTS YIELDED BY AUDITS OF THE ACCOUNTING RECORDS SUBSEQUENT TO THE DENATURING OPERATIONS AND , IF SO , HOW SIGNIFICANT SUCH CHECKS ARE IN RELATION TO THE SUPERVISION PRESCRIBED BY THE RELEVANT PROVISIONS OF REGULATIONS NOS 172/67 AND 1403/69 .
18 THE PLAINTIFFS IN THE MAIN ACTION MAINTAIN THAT AN AUDIT EX POST FACTO , CARRIED OUT PURSUANT TO THE PROVISIONS OF NATIONAL LAW , CANNOT HAVE THE SAME FORCE AS SUPERVISION ON THE SPOT BY INSPECTORS OF THE FEDERAL OFFICE , WHICH IN THEIR OPINION IS THE FORM OF SUPERVISION PROVIDED FOR BY COMMUNITY LAW . THEY CONSIDER THAT THE PROBATIVE VALUE OF SUPERVISION ON THE SPOT IS GREATER THAN THAT OF AN ABSTRACT CHECK SUBSEQUENT TO THE DENATURING OPERATIONS . FURTHERMORE , THEY RELY ON THE PRINCIPLE OF EQUAL TREATMENT BETWEEN UNDERTAKINGS TO JUSTIFY THE PRECEDENCE OF SUPERVISION ON THE SPOT , WHICH ALONE IS LAID DOWN BY COMMUNITY LAW .
19 THE COMMISSION AND THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY MAINTAIN HOWEVER THAT ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 OF THE COUNCIL PERMITS THE MEMBER STATES TO PRESCRIBE CHECKS EX POST FACTO IN ORDER TO SUPPLEMENT THE SUPERVISION PROVIDED FOR BY ARTICLE 4 ( 3 ) OF REGULATION NO 1403/69 AND THAT NATIONAL CHECKS ARE NO LESS IMPORTANT THAN THE SUPERVISION PRESCRIBED BY COMMUNITY LAW .
20 AS THE COURT HAS ALREADY ESTABLISHED IN ITS JUDGMENT OF 11 JULY 1973 IN CASE 3/73 HESSISCHE MEHLINDUSTRIE V EINFUHR- UND VORRATSSTELLE FUR GETREIDE ( 1973 ) ECR 745 , THE AFOREMENTIONED PROVISIONS OF REGULATIONS NOS 172/67 AND 1403/69 MERELY INDICATE THAT SUPERVISION IS INDISPENSABLE WITHOUT SPECIFYING IN WHAT MANNER AND BY WHAT METHOD THE NATIONAL INTERVENTION AGENCIES ARE TO FULFIL THEIR OBLIGATION TO EXERCISE SUPERVISION . IN THAT CASE , THE COURT EMPHASIZED THAT DIFFERENT METHODS OF SUPERVISION SUCH AS SAMPLING , AUDIT OR RECOGNITION OF DENATURING UNDERTAKINGS MAY , INDIVIDUALLY OR IN COMBINATION , BE EQUALLY EFFECTIVE EVEN THOUGH NONE OF THEM CONSTITUTES AN ABSOLUTE GUARANTEE . FINALLY , AS THE COURT HAS OBSERVED , THE COMMUNITY LEGISLATURE HAS REFRAINED FROM ENACTING PROVISIONS REGULATING THE PROCEDURE FOR SUPERVISION IN DETAIL , LEAVING TO THE MEMBER STATES THE POWER TO REGULATE THE DETAILED RULES FOR SUPERVISION UNDER THEIR OWN LEGAL SYSTEM AND ON THEIR OWN RESPONSIBILITY BUT CHOOSING THE MOST APPROPRIATE SOLUTION .
21 THAT DISTRIBUTION OF POWERS IS CONSISTENT WITH THE GENERAL APPROACH ON WHICH THE COMMON ORGANIZATION OF AGRICULTURAL MARKETS IS BASED ACCORDING TO WHICH THE GRANT OF THE DENATURING PREMIUMS PROVIDED FOR BY THE AFORESAID REGULATIONS IS SUBJECT TO COMMON RULES , UNIFORMLY APPLICABLE THROUGHOUT THE COMMUNITY , WHEREAS THE MACHINERY FOR INTERVENTION IS OPERATED BY THE NATIONAL INTERVENTION AGENCIES WHICH ARE , ACCORDINGLY , RESPONSIBLE FOR PERFORMING ALL THE FUNCTIONS OF SUPERVISION NEEDED TO ENSURE THAT DENATURING PREMIUMS ARE ALLOCATED ONLY ON THE CONDITIONS PRESCRIBED BY COMMUNITY LAW AND THAT ANY BREACHES BY TRADERS OF THE RULES OF COMMUNITY LAW ARE DULY PENALIZED .
22 IN ITS PRESENT STATE , COMMUNITY LAW CONTAINS NO SPECIFIC PROVISIONS RELATING TO THE EXERCISE OF SUPERVISION BY THE COMPETENT NATIONAL AUTHORITIES . THE ONLY REQUIREMENT WHICH MUST BE LAID DOWN IN THAT REGARD FROM THE POINT OF VIEW OF THE COMMUNITY IS THAT THE NATIONAL AUTHORITIES ARE TO ACT IN THIS FIELD WITH THE SAME DEGREE OF CARE AS THEY EXERCISE IN IMPLEMENTING THEIR NATIONAL LEGISLATION , SO AS TO PREVENT ANY EROSION OF THE EFFECTIVENESS OF COMMUNITY LAW .
23 THOSE FINDINGS IN CONNECTION WITH THE LEGISLATION RELATING TO PREMIUMS FOR THE DENATURING OF CEREALS COINCIDE , MOREOVER , WITH THE MORE GENERAL PROVISIONS , CITED ABOVE , OF ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 OF THE COUNCIL , WHICH THEMSELVES CORRESPOND TO THE OBLIGATION IMPOSED ON THE MEMBER STATES BY ARTICLE 5 OF THE EEC TREATY .
24 COMMUNITY LAW , WHICH IN ITS PRESENT STATE DOES NOT LAY DOWN DETAILED RULES GOVERNING SUPERVISION OF THE REGULARITY OF OPERATIONS FOR THE DENATURING OF CEREALS , DOES NOT DEFINE EITHER THE RELATIVE SIGNIFICANCE TO BE ATTRIBUTED TO EACH OF THE SETS OF RULES DETERMINED AND USED BY THE NATIONAL AUTHORITIES .
25 ACCORDINGLY , THE ANSWER TO THE SECOND QUESTION RAISED BY THE COURT MAKING THE REFERENCE MUST BE THAT COMMUNITY LAW IN ITS PRESENT STATE DOES NOT RESTRICT TO A SPECIFIC METHOD THE SUPERVISION , BY THE COMPETENT AUTHORITIES OF THE MEMBER STATES , OF THE REGULARITY OF DENATURING OPERATIONS CONFERRING ENTITLEMENT TO PAYMENT OF THE PREMIUM . SUPERVISION MAY INTER ALIA TAKE THE FORM OF AN AUDIT OF THE ACCOUNTING RECORDS . IT IS FOR THE COMPETENT NATIONAL AUTHORITIES TO DETERMINE , SUBJECT TO REVIEW BY THE NATIONAL COURTS , WHAT PROBATIVE VALUE IT IS APPROPRIATE TO ATTRIBUTE TO THE RESULTS OF THE VARIOUS TYPES OF SUPERVISION TO WHICH DENATURING OPERATIONS ARE SUBJECT .
THIRD QUESTION
26 UNDER THE AFORESAID PROVISIONS OF ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 OF THE COUNCIL , THE MEMBER STATES ARE TO TAKE , IN ACCORDANCE WITH NATIONAL PROVISIONS LAID DOWN BY LAW , REGULATION OR ADMINISTRATIVE ACTION , THE MEASURES NEEDED TO PREVENT AND DEAL WITH IRREGULARITIES AFFECTING TRANSACTIONS FINANCED BY THE FUND AND TO RECOVER SUMS LOST AS A RESULT OF IRREGULARITIES OR NEGLIGENCE .
27 IN ITS THIRD QUESTION , AS CLARIFIED BY THE GROUNDS STATED FOR ITS DECISION , THE VERWALTUNGSGERICHT ASKS THE COURT WHETHER THOSE PROVISIONS REQUIRE THE MEMBER STATES TO DEMAND IN ALL CIRCUMSTANCES REPAYMENT OF DENATURING PREMIUMS UNLAWFULLY GRANTED OR WHETHER ARTICLE 8 OF REGULATION NO 729/70 TRANSFORMS THAT OBLIGATION INTO AN OPTION AND MAKES IT POSSIBLE FOR THE LAWS OF THE MEMBER STATES TO LEAVE INDIVIDUAL CASES TO THE DISCRETION OF THE COMPETENT NATIONAL AUTHORITIES .
28 IN REPLY TO THAT QUESTION , THE PLAINTIFFS IN THE MAIN ACTION STATE THAT NATIONAL LAW MAY , WHERE NECESSARY , LEAVE TO THE COMPETENT AUTHORITIES THE EXERCISE OF A DISCRETION TO DETERMINE WHETHER OR NOT IT IS APPROPRIATE TO DEMAND REPAYMENT OF PREMIUMS UNDULY PAID . THE POSITION ADOPTED BY THE COMMISSION AND THE FEDERAL REPUBLIC OF GERMANY IS CONTRARY TO THAT OF THE FOUR AGRICULTURAL COOPERATIVES .
29 IT IS CLEAR FROM THE AFORESAID PROVISIONS OF ARTICLE 8 OF REGULATION NO 729/70 THAT THE MEMBER STATES ARE ENTRUSTED WITH THE TASK OF BRINGING PROSECUTIONS AND INSTITUTING PROCEEDINGS WHERE IT IS NECESSARY FOR THE OPERATION OF THE COMMUNITY MACHINERY FOR AGRICULTURAL INTERVENTION AND , IN PARTICULAR , THAT THEY ARE RESPONSIBLE FOR RECOVERY OF PREMIUMS FROM THE FUND WHICH HAVE BEEN UNDULY PAID . IN THOSE CIRCUMSTANCES , WHERE THE IMPLEMENTATION OF A COMMUNITY REGULATION IS A MATTER FOR THE NATIONAL AUTHORITIES SUBJECT TO REVIEW BY THE NATIONAL COURTS , IMPLEMENTATION MUST COMPLY WITH THE PRO CEDURAL AND FORMAL RULES PRESCRIBED BY THE NATIONAL LAW OF THE MEMBER STATE CONCERNED . HOWEVER , AS THE COURT HAS ALREADY EMPHASIZED IN A NUMBER OF CONSISTENT DECISIONS , RECOURSE TO RULES OF NATIONAL LAW IS POSSIBLE ONLY IN SO FAR AS IT IS NECESSARY FOR THE IMPLEMENTATION OF PROVISIONS OF COMMUNITY LAW AND IN SO FAR AS THE APPLICATION OF THOSE RULES OF NATIONAL LAW DOES NOT JEOPARDIZE THE SCOPE AND EFFECTIVENESS OF THAT COMMUNITY LAW .
30 IN PARTICULAR , IT IS APPROPRIATE TO POINT OUT THAT THE VERY WORDING OF ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 CONCERNING THE RECOVERY BY THE MEMBER STATES OF SUMS LOST AS A RESULT OF IRREGULARITIES , EXPRESSLY REQUIRES THE NATIONAL AUTHORITIES RESPONSIBLE FOR OPERATING COMMUNITY MACHINERY FOR AGRICULTURAL INTERVENTION TO RECOVER SUMS UNDULY OR IRREGULARLY PAID ; AND SUCH AUTHORITIES , ACTING ON BEHALF OF THE COMMUNITY , MAY NOT , ON SUCH OCCASIONS , EXERCISE A DISCRETION AS TO THE EXPEDIENCY OF DEMANDING REPAYMENT OF COMMUNITY FUNDS UNDULY OR IRREGULARLY GRANTED . THE OPPOSITE INTERPRETATION WOULD LEAD TO AN EROSION BOTH OF THE PRINCIPLE OF EQUAL TREATMENT BETWEEN UNDERTAKINGS FROM DIFFERENT MEMBER STATES AND OF THE APPLICATION OF COMMUNITY LAW WHICH MUST , SO FAR AS POSSIBLE , REMAIN UNIFORM THROUGHOUT THE COMMUNITY .
31 ACCORDINGLY , THE ANSWER TO THE THIRD QUESTION RAISED BY THE COURT MAKING THE REFERENCE MUST BE THAT ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 OF THE COUNCIL REQUIRES AND DOES NOT MERELY EMPOWER THE MEMBER STATES TO DEMAND REPAYMENT OF COMMUNITY DENATURING PREMIUMS UNDULY OR IRREGULARLY GRANTED , AND IT IS NOT POSSIBLE TO LEAVE THE QUESTION OF REPAYMENT IN EACH INDIVIDUAL CASE TO THE DISCRETION OF THE COMPETENT NATIONAL AUTHORITIES .
Decision on costs
COSTS
32 THE COSTS INCURRED BY THE COMMISSION OF THE EUROPEAN COMMUNITIES AND BY THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY , WHICH HAVE SUBMITTED OBSERVATIONS TO THE COURT , ARE NOT RECOVERABLE . AS THESE PROCEEDINGS ARE , IN SO FAR AS THE PARTIES TO THE MAIN PROCEEDINGS ARE CONCERNED , IN THE NATURE OF A STEP IN THE PROCEEDINGS PENDING BEFORE THE NATIONAL COURT , THE DECISION ON COSTS IS A MATTER FOR THAT COURT .
Operative part
ON THOSE GROUNDS ,
THE COURT ( SECOND CHAMBER )
IN ANSWER TO THE QUESTIONS SUBMITTED TO IT BY THE VERWALTUNGSGERICHT FRANKFURT AM MAIN , BY ORDERS OF 30 APRIL 1981 , HEREBY RULES :
1 . A DENATURING PREMIUM GRANTED ON THE BASIS OF ARTICLE 4 ( 2 ) OF REGULATION NO 172/67 MUST , IF THE STANDARD METHOD LAID DOWN IN ANNEX I TO REGULATION NO 1403/69 OF THE COMMISSION IS SELECTED , BE REGARDED AS WRONGLY PAID IF THE RULES FOR THAT METHOD HAVE NOT BEEN COMPLIED WITH .
2.COMMUNITY LAW IN ITS PRESENT STATE DOES NOT RESTRICT TO A SPECIFIC METHOD THE SUPERVISION , BY THE COMPETENT AUTHORITIES OF THE MEMBER STATES , OF THE REGULARITY OF DENATURING OPERATIONS CONFERRING ENTITLEMENT TO PAYMENT OF THE PREMIUM . SUPERVISION MAY INTER ALIA TAKE THE FORM OF AN AUDIT OF THE ACCOUNTING RECORDS . IT IS FOR THE COMPETENT NATIONAL AUTHORITIES TO DETERMINE , SUBJECT TO REVIEW BY THE NATIONAL COURTS , WHAT PROBATIVE VALUE IT IS APPROPRIATE TO ATTRIBUTE TO THE RESULTS OF THE VARIOUS TYPES OF SUPERVISION TO WHICH DENATURING OPERATIONS ARE SUBJECT .
3.ARTICLE 8 ( 1 ) OF REGULATION NO 729/70 OF THE COUNCIL REQUIRES AND DOES NOT MERELY EMPOWER THE MEMBER STATES TO DEMAND REPAYMENT OF COMMUNITY DENATURING PREMIUMS UNDULY OR IRREGULARLY GRANTED , AND IT IS NOT POSSIBLE TO LEAVE THE QUESTION OF REPAYMENT IN EACH INDIVIDUAL CASE TO THE DISCRETION OF THE COMPETENT NATIONAL AUTHORITIES .
Full & Egal Universal Law Academy