Vandemoortele NV v Commission of the European Communities. (Agriculture) [1990] EUECJ C-172/89 (12 December 1990)

Judgment 1 By application lodged at the Court Registry on 17 May 1989, Vandemoortele NV, whose registered office is at Izegem ( Belgium ), brought an action for the annulment of the Commission' s decision, notified by telex on 15 March 1989, to withhold the sum of ECU 56 463 from the amount payable to the applicant for the supply of Community food aid . 2 By Regulation ( EEC ) No 941/88 of 8 April 1988 on the supply of refined rape seed oil to Bangladesh as food aid ( Official Journal 1988 L 92, p . 26 ), the Commission initiated a tendering procedure pursuant to Commission Regulation ( EEC ) No 2200/87 of 8 July 1987 laying down general rules for the mobilization in the Community of products to be supplied as Community food aid ( Official Journal 1987 L 204, p . 1 ) and in accordance with the conditions appearing in the annex to the abovementioned Regulation No 941/88 . 3 The applicant was the successful tenderer for the supply of 2 000 tonnes of refined rape seed oil to be delivered "free-at-port-of-landing - landed" at Chittagong on 31 July 1988 at the latest . In accordance with the tendering conditions, on 29 April 1988 the applicant lodged a delivery security equivalent to 10% of the amount of the tender in ecus . The security was subsequently released on the lodging of security in connection with the advance payment under Article 18(5 ) of Regulation No 2200/87 . That security was itself released on 30 January 1989 . 4 Because of a breakdown in the engine of the ship onto which the rape seed oil had been loaded, it arrived at the port of destination, Chittagong, on 28 September 1988, 59 days late . 5 At the time of the final settlement, the Commission deducted ECU 56 463 corresponding to one-thousandth of the total amount of the tender per day of delay, applying the third indent of Article 22(2)(b ) of Regulation No 2200/87, according to which the delivery security is to be withheld to the extent of one-thousandth of the total value of the tender for each day' s delay in making the goods available or in shipment in the case of supply free-at-port-of-shipment, or in arrival at the port of landing in the case of supply free-at-port-of-landing or in arrival at the destination in the case of supply free-at-destination, whichever is appropriate . 6 Reference is made to the Report for the Hearing for a fuller account of the facts of the case, the course of the procedure and the pleas and arguments of the parties, which are mentioned or discussed hereinafter only in so far as is necessary for the reasoning of the Court . 7 The applicant raises three pleas, alleging infringement of Regulation No 2200/87, infringement of the principle of legitimate expectations and infringement of the principle of proportionality respectively . Plea of infringement of Regulation No 2200/87 8 The applicant claims that there is no provision in Regulation No 2200/87 enabling the Commission to withhold part of the amount payable for the supply because of delay in delivery . By withholding the amount at issue, the Commission had, without legal authority, extended the scope of the third indent of Article 22(2)(b ) of the said regulation which provides for withholding only in connection with the delivery security and only at the time of its release . 9 In this connection it must be observed that, as the Court stated in its judgment in Case 117/83 Koenecke v BALM [1984] ECR 3291, a penalty, even of a non-criminal nature, cannot be imposed unless it rests on a clear and unambiguous legal basis . In order to make an assessment of the plea, it is necessary to examine whether Regulation No 2200/87 provides such a basis . 10 Article 22(2 ) of Regulation No 2200/87 provides for withholding amounts only on the release of the delivery security provided for in Article 12 . 11 However, the amount at issue was withheld not at the time of the release of the delivery security but at the time of payment, when deductions may be made under Article 18(2 ) only where the quality of the goods or the packaging is found at the supply stage not to correspond exactly to the requirements laid down . 12 The Commission argues that, in the case of supply free-at-port-of-landing or supply free-at-destination, it generally does not know at the time of release of the delivery security and the security for the advance, whether there is a delay in delivery and consequently if it cannot withhold any amount at a later stage, there can be no penalty for delays of less than 60 days . Article 20, which provides that the successful tenderer shall bear all the financial consequences resulting from total or partial failure to supply the goods on the terms stipulated, applies only to delays of more than 60 days . 13 That argument could have supported an interpretation such as that advocated by the Commission if the terms of the rules in question were open to interpretation . But the argument by itself is insufficient to justify the imposition of a penalty in circumstances which are different from those clearly envisaged by those rules . 14 It follows that the decision to withhold the amount at issue after the release of the delivery security is without legal basis and must therefore be annulled . 15 Consequently, it is not necessary to examine the two other pleas . Costs 16 Under Article 69(2 ) of the Rules of Procedure, the unsuccessful party is to be ordered to pay the costs . Since the Commission has failed in its submissions, it must be ordered to pay the costs . on those grounds, THE COURT ( Third Chamber ) hereby : ( 1 ) Annuls the Commission' s decision notified by telex on 15 March 1989 to withhold the sum of ECU 56 463 from the amount payable to the applicant for the supply of Community food aid; ( 2 ) Orders the Commission to pay the costs . © European Communities, 2001 All rights reserved BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII