Opinion of the Advocate-General
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Mr President,
Members of the Court,
1. This Opinion concerns the question referred to the Court for a preliminary ruling in proceedings between Antonio Crispoltoni, a tobacco planter in Umbria, Italy, and a farmers' association of which he is a member, the Fattoria autonoma tabacchi di Città di Castello (hereinafter referred to as the "Fattoria").
2. After delivering a quantity of leaf tobacco of the "Bright" variety to the defendant association, Mr Crispoltoni received, by way of advance payment, and subject to the lodging of a security, the premium laid down in Article 3(1) of Regulation (EEC) No 727/70 of the Council of 21 April 1970 on the establishment of a common organization of the market in raw tobacco(1) (hereinafter referred to as the "basic regulation"). However, following the entry into force of Regulations (EEC) No 1114/88(2) and (EEC) No 2268/88,(3) that premium was reduced by 5%, and the Italian intervention agency demanded partial repayment from the Fattoria, which passed on that demand to its members. Mr Crispoltoni then brought an action before the Pretore, Perugia, for a declaration that he was not required to pay the amount in question to the Fattoria.
3. The national court is asking the Court of Justice to rule on the "validity of Council Regulations No 1114/88 of 24 April 1988 and No 2268/88 of 19 July 1988".
4. Regulation No 1114/88 amended the basic regulation by establishing in the tobacco sector the system known as "maximum guaranteed quantities", pursuant to which, if production exceeds a certain threshold, the intervention prices and the premiums in respect of the different varieties of tobacco are automatically reduced in proportion to the amount by which the threshold is exceeded. Regulation No 1114/88 also fixed the overall maximum guaranteed quantity for tobacco at 385 000 tonnes for each of the 1988, 1989 and 1990 harvests.
5. Regulation No 2268/88 adopted, for the 1988 harvest, the prices and other elements provided for in the basic regulation, including the maximum guaranteed quantities relating to each of the varieties of tobacco. For the "Bright" variety, that figure was fixed at 38 000 tonnes. Production in 1987 amounted to 40 802 tonnes, and it has subsequently been established(4) that actual production in 1988 reached the level of 42 105 tonnes.
6. I should point out at the outset that I subscribe to the view expressed by the Council that it follows from the order for reference that the question submitted is actually aimed at ascertaining whether the two regulations are valid in so far as they concern the fixing of a maximum guaranteed quantity for tobacco of the "Bright" variety for the 1988 harvest (38 000 tonnes).
7. However, the Council has doubts as to whether the main proceedings are genuine, emphasizing in that respect the special features of the context in which they arose. It states that deliberations of the Regional Council of Umbria mention the existence of proceedings brought before the national and Community courts for a declaration that certain regulations are unlawful. The Council considers it significant that the defendant in the main proceedings is the Fattoria, of which the plaintiff is a member, rather than the Italian intervention agency.
8. In that respect, it is sufficient to cite the consistent case-law of the Court, according to which
"it is solely for the national courts before which the dispute has been brought, and which must bear the responsibility for its subsequent judicial decision, to determine in the light of the special features of each case both the need for a preliminary ruling in order to enable them to deliver judgment and the relevance of the questions which they submit to the Court".(5)
9. The facts mentioned by the Council do not seem to me to be such as to allow the Court to disregard that case-law by calling in question the use made by the national court of its power to request a preliminary ruling.
10. I now turn to the substance of the problem. The national court has doubts as to the validity of the two regulations in question on the ground that they are contrary to the principles of the protection of legitimate expectations, the non-retroactivity of legal measures and legal certainty.
11. Throughout a long line of judgments, the Court has confirmed that,
"although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected".(6)
12. Since it follows from that case-law that the principle of legal certainty precludes the retroactive application of a measure save in exceptional cases where the two conditions laid down by the Court are satisfied, there is no need to dwell on it further; I can thus confine myself to examining whether the retroactive application of the new system was indispensable and whether the legitimate expectations of those concerned were respected.
13. It is true that in this case the two Council regulations did not formally take "effect from a point in time before [their] publication". Regulation No 1114/88 was adopted on 25 April 1988 and came into force on the day of its publication, 29 April 1988. Regulation No 2268/88 is dated 19 July 1988 and also entered into force on the day of its publication, namely 26 July 1988.
14. The fact is, however, that on 29 April 1988 tobacco producers had determined their production for 1988 and that on 26 July 1988 the harvest was already under way. It is common ground, as the Pretore has stated, that tobacco of the "Bright" variety is sown in special seed beds in February and the young plants are planted out in the fields before the end of April. It is the planting-out which seems to be the most costly operation and the one which determines the area under cultivation. It is also common ground that the harvest begins in July.
15. As the principle of the restriction of the guarantee was thus introduced at a time when the decisions regarding production for the current year had already been made, and as the maximum guaranteed amount for the "Bright" variety was fixed when the harvest to which it applied was already under way, I think that it may rightfully be held that the regulations in question were applied retroactively. I see no reason to distinguish between such a situation and one where a provision is expressly stated to apply at a date prior to its publication. It follows that both the conditions laid down by the case-law which I have just cited had to be respected.
16. The first is that retroactivity may be permissible exceptionally, where the purpose to be achieved so demands.
17. However, in that case,
"decisions having such effect must include in the statement of the reasons on which they are based particulars which justify the desired retroactive effect".(7)
18. In this instance, the purpose to be achieved, as indicated in the preamble to the regulation, does not in any way serve to justify the retroactive application of the system of maximum guaranteed quantities to the 1988 harvest. The first recital in the preamble to Regulation No 1114/88 states that,
"in order to curb any increase in the Community' s tobacco production and at the same time to discourage the growing of varieties which are difficult to dispose of,(8) provision should be made for a proportional reduction in the prices and premiums if production exceeds a maximum guaranteed quantity fixed for each harvest; ...".
19. The system of maximum guaranteed quantities was thus introduced for the purpose of discouraging production: it is intended, by means of the threat of a lowering of prices and premiums, to bring about a reduction in production. It is impossible to limit retroactively an increase in production which has already taken place. The threat may have an effect on future harvests, but not on the current harvest.
20. The application of the new system to the 1988 harvest was thus completely inadequate for achieving the purpose sought.
21. It should also be pointed out that neither of the regulations at issue cites any other reason, such as the need to limit Community expenditure, which might, perhaps, have justified their application to the 1988 harvest. The Council obviously chose to achieve the objective of a reduction in expenditure in the tobacco sector by cutting production, and not by directly reducing the prices and premiums, irrespective of such cuts in production.
22. Finally, by Regulation (EEC) No 1251/89(9) of 3 May 1989, the Council replaced paragraph 5 of Article 4 of Regulation No 727/70, which it had introduced scarcely a year earlier by Regulation No 1114/88. The new version expressly provides that "the Council ... shall lay down every year ... for the following year' s harvest", a maximum guaranteed quantity for each tobacco variety or group of varieties. In the first recital in the preamble to that regulation, the Council stated that that was necessary "in order to allow planting to be planned".
23. That all tends to confirm that the fixing of a maximum guaranteed quantity was intended to encourage producers to reduce the areas under cultivation, but that that purpose did not require the retroactive application of that system, since, at the time when the crucial figure (38 000 tonnes) was fixed, the harvest was already under way and that purpose could no longer be achieved.
24. It must therefore be concluded that Regulations No 1114/88 and No 2268/88 are invalid in so far as they fix a maximum guaranteed quantity of 38 000 tonnes for the 1988 harvest for tobacco of the "Bright" variety.
25. As a result, it is only in the alternative, in case the Court does not share that view, that I shall now examine the condition concerning the respect of legitimate expectations.
26. In assessing compliance with that principle within the context of a measure having retroactive effect, the following two questions must, in my opinion, be examined:
(a) should the persons concerned have anticipated the introduction of new regulations with retroactive effect, and should they, accordingly, have taken precautions to avoid being adversely affected by those measures?
(b) if the alteration was not foreseeable, did the competent institution provide adequate transitional measures to protect the interests of the operators who had made their decisions under the old regulations?
27. The first point obviously has features in common with what I have just been saying with regard to the retroactivity of the new system.
28. The Council and the Commission point out that, even if the contested regulations were adopted at a very late stage, their content was sufficiently foreseeable for there to be no question of disregard of legitimate expectations. They rely on the general trend of the common agricultural policy, which, indisputably and for a long time, had been towards the limitation of the guarantees granted to producers. The Commission refers in that connection to a series of texts such as its annual reports, its "Green Paper" of 1985, the conclusions of the 34th, 36th and 38th meetings of the European Council and its two communications of August and September 1987 on the measures intended to control the agricultural markets.
29. It must be recognized that in such circumstances an informed operator could have no doubt that the measures of support provided by the common organization of the markets would be subjected to certain quantitative restrictions. What remained to be seen was to what extent and as from when.
30. The communication from the Commission of 30 September 1987, not published in the Official Journal but probably known in interested circles, stated that for the following year the Commission would propose that the overall maximum guaranteed quantity be fixed at 350 000 tonnes (part H, end of paragraph 2).
In the following paragraph, it was stated that an adjustment of 5% for the year 1988/1989 and of 10% for the year 1989/1990 was foreseen.
31. Since the basic regulation provides that the norm prices and the intervention prices are to be fixed before 1 August of each year for the crop of the following calendar year (Article 2(1) and (5) ) and that the amount of the premium for each variety is to be fixed before 1 November of each year for the crop of the following calendar year, anyone reading the communication of 30 September 1987 could legitimately conclude that the expressions "for the following year" and "for the year 1988/1989" referred to the period from 1 August 1988 to 31 July 1989, that is the 1989 harvest.
32. Furthermore, in the conclusions adopted by the European Council at its 38th meeting in Brussels on 11 and 12 February 1988, all that was mentioned was an overall maximum guaranteed quantity fixed for a period of three years, with no indication of which year would be the first. The year 1988 appears for the first time in the Commission' s proposal for what was to become Regulation No 1114/88, published on 31 March 1988 (Official Journal 1988 C 84, p. 31). However, as that text mentions only the maximum guaranteed quantity of 385 000 tonnes for the whole sector, the producers of the "Bright" variety who were about to transplant the young plants could not foresee what maximum quantity would be applied to them.
33. On the other hand, in its communication of 30 September 1987, the Commission had referred to excess quantities of tobacco of the varieties for which there was least demand. Since the Community was a deficit producer with regard to the "Bright" variety, it was not unreasonable to suppose that that category would be given a maximum guaranteed quantity more or less corresponding to the level of 40 802 tonnes produced in 1987, and not one much lower than that, namely 38 000 tonnes.
34. But what should be noted above all is the fact that that last figure was not known until a very late stage. It does not even appear in the Commission' s proposal, published on 30 May 1988 (Official Journal 1988 C 139, p. 95), which envisaged an amount of 63 000 tonnes for a group of four varieties of tobacco. The figure of 38 000 tonnes appeared for the first time in Regulation No 2268/88, at issue here, which was published on 26 July 1988. In that regulation, the four varieties were allocated a total of 60 500 tonnes instead of the 63 000 tonnes envisaged in the proposal.
35. It should be pointed out, finally, that for the years 1989 and 1990 the Council, which had not in any way altered its policy of limiting the guarantees, fixed the quota at 44 250 tonnes and 46 750 tonnes respectively. In such a context, the figure of 38 000 tonnes laid down for 1988 appears to be truly astonishing.
36. It thus cannot be inferred from the facts set out above that, at the time when the producers of tobacco of the "Bright" variety made their production choices for the 1988 harvest, the essential concrete detailed rules of the new guarantee system were foreseeable, even if the principle of implementing a system of limiting guarantees, based on the exceeding of certain quantities, was foreseeable.
37. It must at least be concluded that the level of the maximum guaranteed quantity fixed for the "Bright" variety for the 1988 harvest was unforeseeable.
38. The second question which must be examined in the context of the protection of legitimate expectations is whether the transitional measure which was laid down by the Council may be considered as having sufficiently safeguarded the interests of the planters who had decided on the scale of their production in the circumstances described above. It should be noted that the transitional measure in question consisted in the fact that, for the 1988 harvest, the reduction in the prices and premiums was restricted to 5%, even where the maximum guaranteed quantity was exceeded by a higher percentage. For the "Bright" variety, the actual overrun amounted to 10.8%. It is also interesting to note, in passing, that there was an overrun of the maximum guaranteed quantity by only five varieties of tobacco out of 34 (see Annex I to Regulation (EEC) No 2158/89, fourth column).
39. In those circumstances, I consider that a distinction must be made between agricultural production where decisions regarding the extent of planting must be made at a precise moment in the year, and where sales contracts are traditionally concluded before a certain date, and other types of production, such as that of milk, where production continues throughout the year, albeit with seasonal fluctuations. In the latter cases, it seems to me to be acceptable that the intervention price may be reduced in the course of the year, since such a change will affect only the milk which will be obtained afterwards. The position is different for a crop such as tobacco, where, as has been seen, the extent of production is determined once and for all in April. The Italian Government and the plaintiff, moreover, stated at the hearing, without being contradicted, that the great majority of sales contracts for tobacco are concluded before 1 May each year.
40. With regard to that type of situation, I consider that any reduction in guaranteed prices, by whatever percentage, made after the decisions regarding production and sales have been made, infringes the legitimate expectations which the producers could properly have acquired, before making those decisions, that the level of the guaranteed prices in the previous year would be maintained, at least in nominal terms. Accordingly, the only transitional measure which could be considered as adequate is one which exempted current production from the change in the system. Even though, as the Court has consistently held, and confirmed quite recently in its judgment in Delacre,(10) a producer can have no legitimate expectation that the support which his production enjoys will be maintained at its present level, that is true with regard to the application of new rules to the future effects of situations created under previous regulations,(11) but not where new rules are applied retroactively to choices made when the former rules obtained.
41. But the Commission is not claiming merely that the transitional measure was adequate; it puts forward a much more radical argument, contending
"that the changes to the system of guarantees did not make it less favourable than the system previously in force, and that its validity thus is not conditional on compliance with the principles of the protection of legitimate expectations, the non-retroactivity of legal rules and legal certainty. Pursuant to Articles 2(2) and 4(1) of Regulation No 727/70, in the version in force prior to the adoption of Regulation No 1114/88, the Community - and consequently the Council - had wide economic and political discretion to fix the prices and premiums. When fixing either prices or premiums, the Community legislature could, in particular, take into account any forecasts concerning changes in the level of supply ...
The prices and premiums, once fixed on that basis, remained unaltered throughout the year, even if the figures relating to the harvests subsequently showed that they could have been fixed at a higher level because the total actual production had been lower than forecast.
With the reform a less rigid method of determination was chosen, which enables the Council to continue to fix the prices and premiums at a low level to take account of forecasts of surplus supply, but which at the same time allows higher prices and premiums to be fixed if in fact supply remains lower than forecast ...
On the basis of the reform, the Council, which, pursuant to Regulation No 727/70 in its previous version, could have fixed the premium for the "Bright" variety - on the basis of forecasts of supply - at ECU 2.338 per kilogram (the premium ultimately received by farmers under the new system), could thus have fixed it at ECU 2.461 per kilogram if the supply had been lower than 38 000 tonnes and could have fixed intermediate premiums in proportion to other levels of supply.
While before the reform producers obtained only the lowest premium, it was possible after the reform for them to obtain a higher premium corresponding to a change in the level of supply which was more favourable than that forecast".(12)
42. What is to be made of that argument? I share the opinion expressed at the hearing by counsel for Mr Crispoltoni, according to which that presentation of the new rules inverts the way the system actually works. The Council begins by fixing the prices and premiums at a high level and it is not until much later, after the total for the whole harvest has been arrived at, that it calculates, in proportion to the overrun of the maximum guaranteed quantity, their actual, lower, level. It is only because a "cut-off" had been provided for the 1988 harvest that it was possible to calculate the low level in advance.
43. On the other hand, according to the first recital in the preamble to Regulation No 1114/88, that system was introduced in order to "curb any increase in ... production". Thus a system of unlimited guarantees (even though it included a certain risk that premiums would be reduced from one year to the next) has been succeeded by a system including, at least potentially, a guarantee which decreases sharply in proportion to the quantity produced.
44. Even if it were accepted that the previous rules allowed the Council to fix the prices and premiums at the level which they finally reached in 1988, the legal situation resulting from the former system was more favourable to producers than that resulting from the new regulations. The latter system does not make it possible for a producer to know, at the time of embarking upon his production year, what quantity he must produce in order to maximize his income, since that depends on the prices and premiums which themselves depend on the extent to which the maximum guaranteed quantity is exceeded. The percentage of the overrun will not be known until after the harvest. On the other hand, under the former system, once the prices had been fixed, even at a low level, producers had no difficulty in determining the level of production which would enable them to maximize their income.
45. Moreover, under the new system the income received depends not only on the production decisions made by each individual planter, but just as much on those made by the other planters. If a certain number of producers of the same variety produce too much, that is enough to cause prices and premiums to fall, notwithstanding any moderation which an individual planter may have exercised. The system as such thus undeniably places them in a less favourable position.
46. In the second place, the Commission' s reasoning presupposes that, within the framework of the previous system, the Council was perfectly entitled to fix, at any time during the spring or summer of 1988, the premium for "Bright" tobacco for the 1988 harvest at ECU 2.338 per kilogram. As I have already pointed out, the basic regulation provides that the premium must be fixed before 1 November of the year before the harvest. The Commission relies on the fact that that rule had not been observed for a long time because it had become customary for the Council to adopt each spring, within the framework of a "single package", the prices for all agricultural products. Without wishing to express an opinion on that problem in all its complexity, I do however suggest that the Court should declare that a practice which is flatly contrary to the applicable law cannot be invoked to deny the existence of a change leaving those concerned worse off, because nemo auditur propriam turpitudinem allegans (no-one who relies on his own misconduct is heard).
47. I would add, finally, that the judgment in Westzucker(13) can hardly be cited as a precedent in the present case.
48. In that case, the plaintiffs had asked for a refund fixed in advance to be increased because the intervention price had been increased before the products in question were actually exported. A provision in the relevant regulation provided for an automatic adjustment in such a situation, but it had been replaced, during the material period, by a provision making that adjustment optional. The Court ruled that
"[i]t seems difficult to consider the amendment of a provision, which was capable, because of its inflexibility, of causing losses or gains for those concerned, as adversely affecting any established position which they hold" (paragraph 8).
The Court added that the old provision did not confer on the persons concerned the certainty of benefiting from an increase in the intervention price because the Council could, on the basis of another provision, have taken measures to prevent the increase of the refund. According to the Court, they "had ... to take into account the possibility" that owing to the second provision the anticipated benefits under the old article would be taken away from them. The Court concluded that the Council did "not change intrinsically the situation of the persons concerned" and that the alteration which had come about was not to be regarded as infringing the protection of the legitimate expectations of persons concerned (paragraphs 9 and 10).
49. I consider that that reasoning cannot be transposed to the present case because the exporter in that case, Westzucker, had obtained advance fixing of its export refund and had most probably concluded its contracts of sale on that basis. What it suffered was a loss of profit, that is to say it did not enjoy an increase in that refund, an increase on which it could not rely with certainty at the time when it applied for advance fixing, because the decision to raise the level of the intervention price did not come about until later.
50. For all those reasons, I consider that in this case there has definitely been a change leaving those concerned in a less favourable position. It was not reasonably foreseeable, and as the transitional measures were inadequate, the legitimate expectations of the planters of "Bright" tobacco were infringed.
51. Since the two conditions to which the Court makes the retroactive application of a measure subject - namely that the retroactive effect be indispensable and that the legitimate expectations of those concerned be respected - have thus not been fulfilled, it must be concluded that the regulations at issue are invalid in so far as they lay down a maximum guaranteed quantity of 38 000 tonnes for tobacco of the "Bright" variety for the 1988 harvest.
52. I do not think it necessary to confine that conclusion to tobacco harvested in Umbria. It is apparent from Annex III to Regulation No 2268/88 that the "Bright" variety is produced only in Italy. It may be presumed that at the time when that regulation, which fixed the maximum guaranteed quantity of 38 000 tonnes, was published on 26 July 1988, the transplanting of the young plants had already been carried out throughout the territory of Italy, so that the criticism regarding the unlawful retroactivity of the new system holds good for all the regions of production.
Conclusion
53. I suggest, therefore, that the national court' s question be answered as follows:
"Council Regulation (EEC) No 1114/88 of 25 April 1988 and Council Regulation (EEC) No 2268/88 of 19 July 1988 are invalid in so far as they lay down a maximum guaranteed quantity of 38 000 tonnes with regard to tobacco of the 'Bright' variety harvested in 1988."
( *) Original language: French.
( 1) OJ, English Special Edition 1970 (I), p. 206.
( 2) Council Regulation (EEC) No 1114/88 of 25 April 1988 amending Regulation (EEC) No 727/70 on the common organization of the market in raw tobacco (OJ 1988 L 110, p. 35).
( 3) Council Regulation (EEC) No 2268/88 of 19 July 1988 fixing, for the 1988 harvest, the norm and intervention prices and the premiums granted to purchasers of leaf tobacco, the derived intervention prices for baled tobacco, the reference qualities, the production areas and the guaranteed maximum quantities and amending Regulation (EEC) No 1975/87 (OJ 1988 L 199, p. 20).
( 4) Commission Regulation (EEC) No 2158/89 of 18 July 1989, determining, for tobacco from the 1988 harvest, the quantity actually produced and the prices and premiums payable under the system of maximum guaranteed quantities (OJ 1989 L 207, p. 15).
( 5) Judgment in Joined Cases C-297/88 and C-197/89 Dzodzi [1990] ECR I-3763.
( 6) Judgments in Case 98/78 Racke [1979] ECR 69, at p. 86, and Case 99/78 Decker [1979] ECR 101, at p. 111. See also judgment in Joined Cases 212/80 to 217/80 Amministrazione delle Finanze dello Stato v Salumi [1981] ECR 2735, at p. 2751; judgment in Case 84/81 Staple Dairy Products v Intervention Board [1982] ECR 1763, at p. 1777; judgments in Case 108/81 Amylum v Council [1982] ECR 3107, at p. 3130, Case 110/81 Roquette Freres v Council [1982] ECR 3159, at p. 3206 and Case 114/81 Tunnel Refineries v Council [1982] ECR 3189, at p. 3206; judgment in Case 224/82 Meiko-Konservenfabrik v Germany [1983] ECR 2539, at p. 2548.
( 7) Order in Case 1/84 R Ilford v Commission [1984] ECR 423, at p. 431.
( 8) Emphasis added.
( 9) Council Regulation (EEC) No 1251/89 of 3 May 1989 amending Regulation (EEC) No 727/70 (OJ 1989 L 129, p. 16).
( 10) Judgment in Case C-350/88 Delacre [1990] ECR I-395, paragraphs 33 and 34.
( 11) For example, milk produced by a cow bought some time previously.
( 12) Paragraphs 5 and 6 of the Commission' s observations.
( 13) Judgment in Case 1/73 Westzucker [1973] ECR 723, at p. 730.
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