Kingdom of Belgium and Federal Republic of Germany v Commission of the European Communities. [1997] EUECJ C-9/95 (4 February 1997)

Judgment 1 By applications lodged at the Court Registry on 16 January 1995 in Case C-9/95 and on 17 May 1995 in Case C-156/95, the Kingdom of Belgium brought an action under the first paragraph of Article 173 of the EC Treaty for annulment of Commission Regulation (EC) No 2791/94 of 16 November 1994 on the exceptional allocation of a quantity additional to the tariff quota for imports of bananas in 1994 as a result of tropical storm Debbie (OJ 1994 L 296, p. 33) and of Commission Regulation (EC) No 510/95 of 7 March 1995 on the exceptional allocation of a quantity additional to the tariff quota for imports of bananas during the first quarter of 1995 as a result of tropical storm Debbie (OJ 1995 L 51, p. 8) (hereinafter `the contested regulations'). By application lodged at the Court Registry on 2 February 1995 in Case C-23/95, the Federal Republic of Germany brought an action under the first paragraph of Article 173 of the EC Treaty for annulment of Article 1(2) and Article 2 of Regulation No 2791/94. 2 By three orders of the President of the Court of 6 July 1995 (C-9/95 and C-23/95) and 9 January 1996 (C-156/95), the United Kingdom was given leave to intervene in the three cases in support of the form of order sought by the Commission. 3 By order of the President of the Court of 6 September 1995, the French Republic was given leave to intervene in Case C-156/95 in support of the form of order sought by the Commission. 4 By order of the President of the Court of 14 June 1996, the three cases were joined for the purposes of the oral procedure and the judgment. 5 Title IV of Council Regulation (EEC) No 404/93 of 13 February 1993 on the common organization of the market in bananas (OJ 1993 L 47, p. 1; hereinafter `the Council regulation'), introduced a common regime for trade with third countries in place of the various arrangements previously in force in the Member States. 6 Article 18(1) of that regulation, as amended by Council Regulation (EC) No 3290/94 of 22 December 1994 on the adjustments and transitional arrangements required in the agriculture sector in order to implement the agreements concluded during the Uruguay Round of multilateral trade negotiations (OJ 1994 L 349, p. 105), provides that a tariff quota of 2.1 million tonnes (net weight) is to be opened for 1994 and of 2.2 million tonnes (net weight) for subsequent years for imports of `third-country bananas' and `non-traditional ACP bananas'. 7 Article 19(1) of the Council regulation distributes the tariff quota, which is opened for 66.5% to the category of operators who marketed third-country or non-traditional ACP bananas, 30% to the category of operators who marketed Community or traditional ACP bananas and 3.5% to the category of operators established in the Community who started marketing bananas other than Community or traditional ACP bananas from 1992. Article 19(4) provides: `If the tariff quota is increased, the additional available quantity shall be allocated to importers in the categories referred to in paragraph 1 ...' 8 Article 16(1) of the Council regulation provides that each year a forecast supply balance is to be prepared on production and consumption in the Community and of imports and exports. According to Article 16(3) of that regulation: `Where necessary, in particular to take account of the effects of exceptional circumstances affecting production or import conditions, the balance may be adjusted during the marketing year. In such a case, the tariff quota provided for in Article 18 shall be adapted in accordance with the procedure laid down in Article 27.' 9 The last subparagraph of Article 18(1) of the Council regulation provides that where Community demand determined on the basis of the forecast supply balance increases, the volume of the annual quota is to be increased in accordance with the procedure laid down in Article 27. 10 Article 20 of the Council regulation empowers the Commission to adopt and adjust the forecast supply balance referred to in Article 16 and to adopt detailed rules for implementing Title IV, which may cover in particular additional measures concerning the issue of licences, their term of validity and the conditions governing transferability. 11 Article 30 of that regulation provides: `If specific measures are required after July 1993 to assist the transition from arrangements existing before the entry into force of this Regulation to those laid down by this Regulation, and in particular to overcome difficulties of a sensitive nature, the Commission, acting in accordance with the procedure laid down in Article 27, shall take any transitional measures it judges necessary.' 12 Article 27 of the Council regulation, to which in particular Articles 16, 18 and 30 refer, authorizes the Commission to adopt implementing measures in accordance with what is known as the management committee procedure. That provision provides in particular that the committee is to deliver its opinion on the measures to be taken, within a time-limit to be set by its chairman according to the urgency of the questions under consideration, and that the Commission is to adopt measures which are to apply immediately. 13 Article 12 of the regulation, which forms part of Title III, Assistance, creates a mechanism for the grant of aid to Community banana producers to compensate for any loss of income. 14 In order to implement the Council regulation, the Commission adopted in particular Commission Regulation (EEC) No 1442/93 of 10 June 1993 laying down detailed rules for the application of the arrangements for importing bananas into the Community (OJ 1993 L 142, p. 6), which also distinguishes between the three categories of operators referred to at paragraph 7 of this judgment, classifying them as categories A, B and C. 15 The adoption of Regulations Nos 2791/94 and 510/95 is justified in the second recital as follows: `... on 10 September 1994 tropical storm Debbie caused severe damage to the banana plantations in the Community regions of Martinique and Guadeloupe and in the ACP States of Saint Lucia and Dominica; whereas the effects of these exceptional circumstances on production in the regions affected will be felt until July 1995 and will greatly affect imports and supplies to the Community markets during the fourth quarter of 1994 [Regulation No 2791/94; during the first quarter of 1995, in the case of Regulation No 510/95]; whereas this is likely to cause an appreciable increase in market prices in certain regions of the Community'. 16 The contested regulations are based on the Council regulation, in particular Articles 16(3), 20 and 30, and likewise on Regulation No 1442/93. 17 With regard to Article 16(3), the Commission stated in the fourth recital in the preambles to Regulations Nos 2791/94 and 510/95 that: `the adaptation of the tariff quota must permit adequate supplies to the Community market up to the end of 1994 [Regulation No 2791/94; during the first quarter of 1995, in the case of Regulation No 510/95] and provide compensation to operators who include or directly represent banana producers who suffered loss [damage, in the case of Regulation No 510/95] and who, in addition, in the absence of appropriate measures, risk losing their traditional outlets on the Community market on a long-term basis'. 18 The contested regulations establish an additional quantity of 53 400 and 45 500 tonnes, respectively, allocated to operators supplying the Community with bananas from Martinique, Guadeloupe, Saint Lucia and Dominica. 19 Commission Decision 94/654/EC of 29 September 1994 adopting the forecast supply balance for banana production, consumption, imports and exports for the Community for 1994 (OJ 1994 L 254, p. 90), which preceded Regulation No 2791/94, states, in the second recital in the preamble, that the supply balance should be reviewed `to take account of the impact on production in Martinique, Guadeloupe and certain ACP States, of tropical storm Debbie'. 20 Commission Decision 94/752/EC of 18 November 1994 amending Decision 94/654/EC (OJ 1994 L 298, p. 48), which was adopted after Regulation No 2791/94, laid down a revised forecast supply balance on the basis of an examination of the situation and a reliable estimate of the consequences of tropical storm Debbie for the production and availability of bananas from certain Community production regions and ACP States which were victims of that storm. The first plea 21 The Kingdom of Belgium and the Federal Republic of Germany submit that neither Article 16(3) nor Article 20 nor Article 30 of the Council regulation allows any departure to be made from the allocation formula laid down by Article 19(1) in the event of an increase in the tariff quota. Consequently, those provisions cannot serve as the basis for the contested regulations. 22 As far as Article 30 of the Council regulation is concerned, the Court has held that, as appears from the 22nd recital in the preamble to that regulation, that provision is intended to deal with any disturbance in the internal market which the replacement of the various national arrangements by the common organization of the market threatens to bring about. To that end, that provision requires the Commission to take any transitional measures it judges necessary (order of 29 June 1993 in Case C-280/93 R Germany v Council [1993] ECR I-3667, paragraphs 46 and 47, and the judgment in Case C-68/95 T. Port v Bundesanstalt für Landwirtschaft und Ernährung [1996] ECR I-6065 , paragraph 34). 23 Application of Article 30 is subject to the condition that the specific measures which the Commission must adopt are intended to assist transition from national arrangements to the common organization of the market and that they are necessary for that purpose (T. Port, cited above, paragraph 35). 24 Those transitional measures must address difficulties encountered after establishment of the common organization of the market but originating in the state of national markets prior to adoption of the contested regulations (T. Port, paragraph 36). 25 The bad weather which prompted the adoption of the contested regulations does not, however, come within the category of difficulties with which Article 30 is intended to deal and hence that provision cannot serve as the basis for the adoption of the contested regulations. 26 As regards Article 16(3) of the Council regulation, it should be noted that that provision empowers the Commission, in general terms, to adapt, in accordance with the procedure laid down in Article 27, the tariff quota in exceptional circumstances affecting production or import conditions. 27 It should be observed in this regard that in at least two Member States, the United Kingdom and France, mechanisms existed enabling essential measures to be taken in the event of natural disasters. Since it had not itself laid down any rules in Regulation No 404/93 to cope with exceptional circumstances affecting production or import conditions, the Council considered it preferable to empower the Commission or to reserve itself the right to adapt the tariff quota as required by each individual case, whilst complying with the procedure laid down in Article 27. 28 Moreover, the Kingdom of Belgium's argument that the compensatory aid provided for by Article 12 of the Council regulation would be the proper means of dealing with the damage caused by natural disasters, cannot be accepted. 29 As the Commission has rightly pointed out, compensatory aid is granted in respect of bananas sold on the Community market and calculated by reference to the average production income of a producer region. However, where banana trees are destroyed by a storm, no marketing of bananas from the region affected by the storm takes place and the difference between the average production income of a region and the average Community income is not capable of compensating for the losses caused by such a natural disaster. Furthermore, only Community producers qualify for the aid provided for by Article 12. 30 In order to assess whether, when modifying the tariff quota pursuant to Article 16(3) of the Council regulation, the allocation formula laid down in Article 19(1) must be observed, reference should be made to the wording and the context of Article 19(1) and (4). 31 In this regard, it should be noted that Article 19(4) of the Council regulation must be read in conjunction with the fourth subparagraph of Article 18(1), which deals with an increase in the tariff quota for the next marketing year following an increase in Community demand determined on the basis of the supply balance of Community consumption during the marketing year. 32 In contrast, the provisions of Article 16(3), which, as Title IV of the Council regulation is structured, precede Articles 18 and 19, are concerned, not with the annual, regular increase in the quota, but with adapting it during the marketing year in order to deal with emergencies, in particular the effects of exceptional circumstances affecting production or import conditions, such as the natural disasters which prompted the adoption of the contested regulations. Moreover, the ninth recital in the preamble to the Council regulation expressly provides that it should be possible to revise the forecast supply balance during the year in the light of circumstances, including specific climatic events. 33 However, to apply the allocation formula laid down by Article 19(1) of the Council regulation to an adaptation of the tariff quota pursuant to Article 16(3) would disregard that objective inasmuch as it would result in additional import rights being allocated to economic operators who have not been victims of exceptional circumstances and would fail to respond to the specific situation of operators who have been victims of such events. 34 It follows from the foregoing that, in the event of an adaptation of the tariff quota in the course of a marketing year on grounds of necessity, it is possible, under Article 16(3) of the Council regulation, to derogate from the allocation formula set out in Article 19(1) of the Council regulation in respect of the fraction of the quota which is adjusted. 35 The powers thus conferred upon the Commission by Article 16(3) of the Council regulation do not go beyond those which may be given it under the fourth indent of Article 155 of the EC Treaty. 36 The Court has consistently held that it follows from the Treaty context in which Article 155 must be placed and also from practical requirements that the concept of implementation must be given a wide interpretation. Since only the Commission is in a position to keep track of agricultural market trends and to act quickly when necessary, the Council may confer on it wide powers in that sphere. Consequently, the limits of those powers must be determined by reference amongst other things to the essential general aims of the market organization (Case 22/88 Vreugdenhil and Another v Minister van Landbouw en Visserij [1989] ECR 2049, paragraph 16, and the cases cited therein, and Case C-478/93 Netherlands v Commission [1995] ECR I-3081, paragraph 30). 37 Thus, the Court has held that, in matters relating to agriculture, the Commission is authorized to adopt all the measures which are necessary or appropriate for the implementation of the basic legislation, provided that they are not contrary to such legislation or to the implementing legislation adopted by the Council (Case 121/83 Zuckerfabrik Franken v Hauptzollamt Würzburg [1984] ECR 2039, paragraph 13, and Netherlands v Commission, cited above, paragraph 31). 38 According to Article 16(3) of the Council regulation, the tariff quota is to be adapted in accordance with the procedure laid down in Article 27. 39 According to the last recital in the preamble to the contested regulations, the Management Committee for Bananas did not deliver an opinion within the time-limit set by its chairman. 40 It therefore fell to the Commission to adopt the measures required by the urgency of the situation. 41 In the circumstances, it must be held that the Commission was entitled, in adopting the contested regulations, to base itself on Article 16(3) of the Council regulation. 42 The first plea in support of annulment should therefore be rejected. The second plea 43 In raising this plea the Federal Republic of Germany observes, first, that Regulation No 2791/94 does not contain any indication as to the damage sustained. The forecast supply balance drawn up on 29 September 1994 did not take account of the consequences of tropical storm Debbie. The revised balance of 18 November 1994, which was drawn up after Regulation No 2791/94 was adopted, refers to the loss of supply of the Community as a whole and of all the ACP countries. Even assuming that the crop losses were of the order of 53 400 tonnes, as Regulation No 2791/94 states, that regulation does not contain any statement of reasons justifying its overcompensation of the losses through the grant of rights to import third-country bananas. 44 In this regard, it must be borne in mind that the Court has consistently held that the statement of reasons required by Article 190 of the Treaty must be appropriate to the nature of the measure in question. It must show clearly and unequivocally the reasoning of the institution which enacted the measure so as to inform the persons concerned of the justification for the measure adopted and to enable the Court to exercise its powers of review. It has also been held that the statement of reasons for a measure is not required to specify the matters of fact or of law dealt with, provided that it falls within the general scheme of the body of measures of which it forms part (see Joined Cases C-63/90 and C-67/90 Portugal and Spain v Council [1992] ECR I-5073 , paragraph 16, and Case C-353/92 Greece v Council [1994] ECR I-3411 , paragraph 19). 45 As noted in paragraph 15 of this judgment, the Commission justified adoption of the contested regulations in terms of the tropical storms which struck certain territories of the Community and certain ACP States, the injurious effects of those natural disasters on the production of the affected regions and the impact on supplies to the Community market; it also adverted to the risk that prices might rise in some regions of the Community. 46 Likewise, the Commission explained, as appears from paragraph 17 of this judgment, that adaptation of the tariff quota under Article 16(3) of the Council regulation is intended to ensure adequate supplies to the Community and to compensate operators who have been the victims of natural disasters. 47 In Decision 94/654, the Commission established the forecast supply balance for banana production, consumption, imports and exports for the Community for 1994, while making it clear that the balance would be reviewed in order to take account of natural disasters which had struck certain Community regions and certain ACP States. 48 By Decision 94/752, the Commission published the adjusted forecast supply balance, which resulted in the increase in the tariff quota effected by Regulation No 2791/94. 49 Finally, Article 1(2) of Regulation No 2791/94 quantifies the losses in supply for which compensation should be granted. 50 The Federal Republic of Germany also criticizes the Commission for failing to give reasons justifying the need to grant to economic operators who suffered loss rights to import third-country bananas and for overcompensating them for damage caused by the grant of the corresponding import licences. That criticism is based on the assertion that the operators who had suffered loss could have obtained supplies of Community and ACP bananas and that the grant of licences to import third-country bananas means that they benefit financially to a greater degree than they would have by marketing an equivalent quantity of Community or ACP bananas. 51 In this regard, it should be observed, first, that losses in Community banana production or a curtailment of export opportunities for traditional ACP bananas should prompt the Commission to grant more rights to import third-country bananas in order to secure a sufficient supply of bananas in the Community. 52 It should further be observed, as the Advocate General stated in point 35 of his Opinion, that it would have been difficult for those economic operators who were the victims of the natural disasters in question to obtain supplies of Community bananas or traditional ACP bananas in so far as production of such bananas had declined, precisely as a result of those disasters. 53 As to the possibility of selling import licences, the Commission stated at the hearing, without being contradicted, that operators who had been the victims of natural disasters actually used the licences in question in order to buy third-country bananas. Therefore, the alleged overcompensation for the damage, for which, according to the applicant, specific reasons should have been given, has not been made out. 54 Accordingly, it should be held that, in view of the specific circumstances, especially the urgency, the Commission provided a sufficient statement of reasons for Regulation No 2791/94, and the plea in support of annulment alleging infringement of Article 190 of the Treaty, raised by the Federal Republic of Germany in Case C-23/95, must be rejected. 55 It follows from the foregoing that the applications brought by the Kingdom of Belgium and the Federal Republic of Germany in the three cases must be dismissed. Costs 56 Under Article 69(2) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs if they have been applied for in the successful party's pleadings. Since the Kingdom of Belgium and the Federal Republic of Germany have been unsuccessful, they must be ordered to pay the costs. Under Article 69(4) of those Rules, Member States and institutions which intervene in the proceedings are to bear their own costs. On those grounds, THE COURT hereby: 1. Dismisses the applications; 2. Orders the applicants to pay the costs; 3. Orders the interveners to bear their own costs. © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII