61985C0137

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Mr President,

Members of the Court,

On 22 January 1981, 30 June 1981 and 17 July 1981, the Bundesanstalt fuer landwirtschaftliche Marktordnung ( hereinafter referred to as "BALM" or "the defendant in the main proceedings ") issued three export licences for products coming under the common organization of the market in cereals ( glucose and maize starch powder ) to the plaintiffs in the main proceedings after the latter had lodged the security intended to ensure fulfilment of the undertaking to export during the validity of the licences . Subsequently, the plaintiffs in the main proceedings placed the basic products concerned under customs control within the meaning of Article 4 of Council Regulation No 565/80 of 4 March 1980 on the advance payment of export refunds in respect of agricultural products . ( 1 )

That regulation concerns basic products which are to be processed before export . It makes it possible to pay to traders an amount equal to the export refund "as soon as the basic products are placed under customs control ensuring that the processed products or the goods will be exported within a set time-limit" ( Article*4 ).

Persons seeking to benefit from that scheme must lodge security with the customs authorities guaranteeing reimbursement of an amount equal to the amount paid, plus 20% ( Article 6 of the regulation ). The plaintiffs in the main proceedings lodged such security .

As soon as the products were placed under customs control, the defendant in the main proceedings released the security lodged in respect of the export licences, in accordance with the combined provisions of Articles 29*(b ), 30*(1)*(b ) and ( 2 ) and the fourth indent of Article 22*(1)*(b ) of Commission Regulation No 3183/80 of 3 December 1980 laying down common detailed rules for the application of the system of import and export licences and advance fixing certificates for agricultural products . ( 2 )

It subsequently appeared that in regard to part of the goods in question the plaintiffs in the main proceedings had not complied with the time-limits contained in Article 11 of Commission Regulation No 798/80 of 31 March 1980 laying down general rules on the advance payment of export refunds and positive monetary compensatory amounts in respect of agricultural products . ( 3 )

The defendant in the main proceedings took the view that the circumstances were those referred to in Article 42*(1 ) of Commission Regulation No 3183/80, that is to say, the plaintiffs in the main proceedings had not fulfilled their obligation to export in respect of the quantities of products concerned . The defendant therefore considered itself entitled, under Article 42*(3 ) of that regulation, to apply mutatis mutandis the provisions of the second indent of Article 38*(1)*(c ) of the regulation and to demand repayment, in proportion to the quantities not exported, of the security which had been released and which had originally been lodged in order to guarantee performance of the obligation to export .

The security lodged under the customs control system in accordance with the provisions of Council Regulation No 565/80 of 4 March 1980 was also partly retained by the competent customs authorities . However, that decision is not directly at issue in this case .

The Verwaltungsgericht ( Administrative Court ) Frankfurt am Main, before which the plaintiffs in the main proceedings brought an action against the decision demanding repayment of the export security, asks the Court of Justice to reply to the following question :

"Does the second indent of Article 38*(1)*(c ) of Commission Regulation ( EEC ) No 3183/80 of 3 December 1980 infringe superior rules of Community law inasmuch as it is to be regarded as a measure imposing a sanction?"

The statement of the reasons on which the order for reference is based show that the national court adopted the premise that the second indent of Article 38*(1)*(c ) of Regulation No 3183/80 implies the application of a sanction of a criminal nature . That is not in accordance with the general principles of law in dubio pro reo and nulla poena sine culpa nor with the principle of proportionality . Those principles, which are applicable in the criminal law of the Member States, are also binding in Community law by virtue of the judgment of the Court of 14 May 1974 . ( 4 )

A - The relevance of the national court' s question

In their observations, the plaintiffs in the main proceedings contest the relevance of the national court' s question on the basis of the arguments set out in Part II, Section 1 of the Report for the Hearing .

However, the Court has consistently held that it is for the national court to assess, having regard to the facts of the case, the need to obtain a preliminary ruling to enable it to give judgment . ( 5 )

B - The legal nature of the security

The premise ( repayment of the security = criminal penalty ) adopted by the national court is contrary to the Court' s case-law .

In its judgment of 17 December 1970, ( 6 ) the Court stated, at paragraphs 17 and 18 :

"The plaintiff in the main action also points out that forfeiture of the deposit in the event of the undertaking to import or export not being fulfilled really constitutes a fine or a penalty which the Treaty has not authorized the Council and the Commission to institute .

This argument is based on a false analysis of the system of deposits which cannot be equated with a penal sanction, since it is merely the guarantee that an undertaking voluntarily assumed will be carried out ".

Although the forfeiture of security still held by the intervention agency cannot therefore be treated as a criminal penalty, is the position different when the security has already been released and must therefore be repaid? I do not think so .

In its judgment of 25 September 1984 in Koenecke, ( 7 ) the Court stated that "a penalty, even of a non-criminal nature, cannot be imposed unless it rests on a clear and unambiguous legal basis ". We shall see later that in this case, unlike the situation in Koenecke, such a legal basis exists . What must be emphasized here is that the passage quoted, like the other passages in Koenecke, and in particular paragraph 13, clearly indicates that the Court considered that the retention of security which has first been repaid is undoubtedly a penalty but is of a non-criminal nature .

That seems to me to be entirely logical .

Once an undertaking has not been fulfilled and can no longer be fulfilled, and the security lodged in order to guarantee fulfilment of that undertaking is retained by the competent authority, it ceases to be security and becomes a penalty . That is so a fortiori when the security has already been released . In both cases, exportation within the time-limit laid down is no longer possible . However, if in the first case the penalty is not of a criminal nature, it cannot be of a criminal nature in the second case either . There is in fact no difference in the legal nature of the two situations .

The Commission is right to emphasize that it may be concluded from the judgments in Internationale Handelsgesellschaft and Koenecke that

"although the forfeiture of security may indeed be regarded in certain circumstances as a penalty, it cannot for that reason alone be placed on the same legal footing as a penalty imposed under criminal law ( a fine )".

A contractor who has undertaken to finish a construction job within a precise time-limit and is liable to pay a certain amount of money for every day of delay, and who does not meet the time-limit, cannot be permitted to say that because the job can no longer be terminated within the time-limit laid down the agreed amount constitutes a criminal penalty which he is obliged to pay only if he is ordered to do so by a criminal court to which it has been proved that he is guilty of serious negligence or acted deliberately .

Such reasoning cannot be accepted in regard to security either . It is true that a Community regulation is not the same thing as a civil contract . It is clear that the obligation to export undertaken by Maizena is, in regard to its voluntary nature, not exactly the same thing as the obligation undertaken by a building contractor . ( 8 ) Maizena could not have refused to lodge security if it wished to export, whereas at least in theory a building contractor can refuse to accept the penalty clause .

I therefore agree with P . Tiedemann and R . Barents ( 9 ) when they state that the security intended to guarantee the import or export may not be regarded as entirely comparable with a contractual penalty ( Vertragsstrafe ) in civil law .

On the other hand, there is even less resemblance to a criminal conviction . The Commission rightly claims that "the sole consequence of failure to comply with the undertaking is the forfeiture of the security, and such failure does not give rise to any ( moral ) reprobation . That is why the forfeiture of the security is not entered in any criminal record and the personal position of the debtor is not taken into account in the decision concerning such forfeiture . In particular, it is of little importance whether the trader has previously breached the obligation or whether there are other aggravating or extenuating circumstances" ( Part III, Section 2, last paragraph, of the Commission' s observations ).

It seems to me therefore that R . Barents is right when he proposes to treat the system of deposits "as a separate administrative law phenomenon and to solve the problem of legal protection within this framework . This is what the Court has done in its basic decision on the law of deposits in Case 11/70" ( p.*242 of the article cited ).

Furthermore, the Commission rightly draws attention to the fact that the national legal systems also have rules, particularly in regard to customs and taxation, under which "negative economic consequences ( in the form of obligations to pay a sum of money ) are associated in many cases, in the public interest, with certain conduct which is not necessarily illegal ( or even punishable )" ( Part III, Section 3*(a ) of the Commission' s observations .

Furthermore, modern law makes increasing use of the concept of "objective" or "no-fault liability ". Reference may be made in that regard to The Hague Convention of 2 October 1973 on the law applicable to products liability, the Convention of 27 January 1977 on products liability in regard to personal injury and death, concluded in the framework of the Council of Europe, and the Council directive of 25 July 1985 on the approximation of the laws, regulations and administrative provisions of the Member States concerning liability for defective products . ( 10 ) That directive provides that "the producer shall be liable for damage caused by a defect in his product" ( Article*1 ) because "liability without fault on the part of the producer is the sole means of adequately solving the problem, peculiar to our age of increasing technicality, of a fair apportionment of the risks inherent in modern technological production" ( second recital in the preamble ). It goes on to provide that it is for the producer to free himself from liability by proving the existence of certain exonerating circumstances ( Article*7 ).

The very similar characteristics of the rules on the provision of security in agricultural matters, far from being the expression of an archaic mentality ( 11 ) thus correspond to a trend in modern law .

Not all Community law instruments can be viewed purely and simply in terms of existing concepts of the national legal systems, and even within the latter systems, economic development has led to the establishment of special bodies of rules which come within neither the pre-established categories of civil law nor those of criminal law .

What is important is that the fundamental rights of citizens are not infringed by these new legal techniques, it being clearly understood that "within the Community legal order it ... seems legitimate that these rights should ... be subject to certain limits justified by the overall objectives pursued by the Community, on condition that the substance of these rights is left untouched ". ( 12 )

In its judgment in Internationale Handelsgesellschaft the Court has already considered the system of security as such in the light of the principles referred to on that occasion by the Verwaltungsgericht Frankfurt, and it arrived at the conclusion that it "does not violate any right of a fundamental nature" ( paragraph 20 of the judgment ).

The Verwaltungsgericht Frankfurt now seeks to know whether certain other principles, which it regards as principles of criminal law, are infringed by those rules .

There is a temptation to reply to the national court that since the security is not in the nature of a criminal sanction, the principles of criminal law cannot apply to it . However, great rigour must be observed in regard to fundamental rights, and what some people regard as principles of criminal law, others might regard as fundamental rights or as principles of administrative law designed to provide traders with adequate legal protection . Let us therefore see whether one of the principles cited by the Verwaltungsgericht or by the plaintiffs in the main proceedings may be considered applicable and, if so, whether it is infringed by Article 38 of Regulation No 3183/80 .

C - Validity of Article 38*(1)*(c ) of Regulation No 3183/80

The validity of that provision must obviously be assessed in the light of the superior principles of Community law and not in the light of the rules or concepts of national law . ( 13 )

The national court refers, among the superior rules of Community law, to the following principles :

( i ) in dubio pro reo;

( ii ) nulla poena sine culpa;

( iii ) the principle of proportionality .

In addition, the plaintiffs in the main proceedings rely, in their observations submitted to the Court, on the following maxims :

( i ) nulla poena sine lege;

( ii ) ne bis in idem .

In order to follow a logical order, I shall begin with the latter two principles .

1 . The principle "nullum crimen, nulla poena sine lege" ( principle of legality )

The principle according to which no punishment may be laid down or applied other than by law is not unknown to Community law . For example, the Court has considered the conformity with the principle of legality of a fine imposed by the Commission on a steel producer for exceeding its production quotas . ( 14 )

As I have already pointed out, in Koenecke the Court decided that a penalty, even one of a non-criminal nature, may be imposed only if it has a clear and unambiguous legal basis .

The plaintiffs in the main proceedings, who refer to that judgment, claim that in this case too, such a legal basis is lacking . Article 38 concerns a very special situation, namely the customs rules concerning products re-imported into the Community after having been exported ( returned goods provisions ). Rules which may be justified in that connection are not necessarily justified in other circumstances .

Furthermore, they say, it is unclear what is meant by application mutatis mutandis .

In that regard, I should like to point out the following . It is certain that Article 38, taken in isolation, deals only with the "returned goods" rules . However, it is perfectly clear that Article 42 requires the competent authority which issued the licence to apply the provisions of Article 38*(1)*(c ) where a product has been placed under customs control ( Article 4 of Regulation No 565/80 ) and where the time-limit for exportation has not been complied with ( Article 11 of Regulation No 798/80 ).

BALM' s demand for repayment of the security thus rests on a clear and unambiguous legal basis .

The application mutatis mutandis of a measure to a legal situation which is similar but not identical is a well-known legal technique . In this case, none of the parties in the case was mistaken as to the meaning of the reference or the content of the rule which was to be applied .

Finally, the fact that Article 42*(3 ) is addressed only to "the authority which issued the licence or certificate" and not to the holder of the licence does not constitute a valid objection either . Even supposing that in criminal law all provisions laying down a penalty must necessarily be formulated in the following terms : "any person guilty of ... is liable to incur the punishment of ...", it follows from the Court' s case-law that the provisions of regulations providing for forfeiture of security or the lodging of fresh security are not for that reason criminal sanctions .

It should simply be noted in this connection that the use of the expression "provide fresh security" ( repay the security ) is not appropriate . The term "security" implies the idea of a guarantee . However, as the Court pointed out in Koenecke ( paragraph 10 ), it is not possible to require a guarantee to be reconstituted ( as fresh security lodged ) when the risk in respect of which it was provided has materialized . It would have been more correct to speak of the repayment of an "amount equivalent to the security ".

2 . The principle "ne bis in idem"

The plaintiffs in the main proceedings also claim that they are being punished twice on the basis of the same facts because the security provided for in Article 6 of Regulation No 565/80, lodged where the goods are to be processed, is also intended to ensure the export of the goods .

However, according to that article, the security in that case guarantees the "reimbursement of an amount equal to the amount paid, plus an additional amount ". What has been paid ( in advance ) is the export refund . The security is intended to guarantee repayment of that refund if at the end of the day the goods are not exported .

With regard to the additional 20%, it was "laid down" in order to prevent the exporter concerned obtaining undue benefit . Under the arrangements for advance payment, traders would obtain undue interest-free credit if it subsequently emerged that the refund should not have been granted ". ( 15 )

The principle ne bis in idem cannot therefore be relied on to oppose the reconstitution of an export security .

3 . The principle "in dubio pro reo"

In Internationale Handelsgesellschaft, the Verwaltungsgericht Frankfurt asked whether the system of deposits was lawful inasmuch as forfeiture of the deposit was excluded only in cases of force majeure .

The Court replied as follows to that question :

"It therefore appears that by limiting the cancellation of the undertaking to export and the release of the deposit to cases of force majeure the Community legislature adopted a provision which, without imposing an undue burden on importers or exporters, is appropriate for ensuring the normal functioning of the organization of the market in cereals, in the general interest as defined in Article 39 of the Treaty . It follows that no argument against the validity of the system of deposits can be based on the provisions limiting release of the deposit to cases of force majeure" ( paragraph*25 ).

However, the Verwaltungsgericht Frankfurt considers that the principle in dubio pro reo has not been respected because it is for the person concerned, and not the competent authority, to produce evidence of the existence of force majeure .

It is inconceivable that the competent administrative authority should be required to show in each case that the undertaking was not prevented by force majeure from exporting the goods within the time-limit . Many kinds of force majeure are theoretically possible . The administration cannot be required to attempt to imagine which type of force majeure might have occurred .

Even in criminal law, it is for the accused to indicate the justification on which he relies, to describe in detail what occurred and to put forward all the evidence available to him . He thereby initiates an exchange of arguments with the public prosecutor, who, for his part, will attempt to prove, in so far as is necessary, that the facts alleged are not of such a nature as to exonerate the accused . In the end it is the party who has the better arguments who will be successful .

To my mind, it is a fortiori perfectly compatible with the fundamental rights of the individual that there should be an analogous procedure with regard to the system of security, except that in the latter case the discussion takes place at the first stage between the importer or exporter and the intervention agency, and is carried on, if necessary, not before a criminal court but before an administrative or civil court . Furthermore, it seems to me that in its judgment of 11 July 1968 ( Schwarzwaldmilch ( 16 )), the Court implicitly accepted the validity of those rules of evidence when it stated that "finally, it follows from the scheme of Article 6 of the regulation that it is for the importer to prove the existence of the circumstances necessary to constitute a case of force majeure ".

4 . "Nulla poena sine culpa"

As I have already stated, the Court is confronted here with a case in which the applicable legislation leaves no place for any assessment of the reasons underlying the failure to fulfil the obligation to export, except in the event of force majeure . The penalty laid down is not in the nature of a "poena", that is to say, a criminal sanction . All that remains, therefore, is to consider the argument put forward by the Verwaltungsgericht Frankfurt to the effect that penalties cannot be imposed on a legal person .

However, Community law permits in certain cases the imposition of genuine fines on legal persons . I have already referred 14 to cases in which the Court confirmed the fines imposed by the Commission on steel undertakings . Article 15 of Regulation No 17 of the Council, ( 17 according to which "the Commission may ... impose on undertakings or associations of undertakings fines ...", may also be cited .

The same principle must be all the more applicable where the penalty is not a fine under criminal law .

5 . The principle of proportionality

According to the Verwaltungsgericht Frankfurt, the principle of proportionality is infringed because "the amount of the fine does not depend on the degree of culpability and because no distinction is made between the different kinds of culpability : negligence, gross negligence and intent ."

In that regard, I can only repeat that in this case the Court is concerned with a system of objective liability in the context of which any reference to the concept of subjective fault is excluded .

Article 38 cannot therefore be regarded as invalid on the ground that it infringes the principle of proportionality .

In closing, I should like simply to remind the Court that, largely under the influence of its case-law, Community legislation has been drafted in such a manner as to make it possible in each instance to take account of the nature of the obligation infringed and the extent of that infringement .

Reference should be made in that regard to Commission Regulation No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products ( Official Journal, L*205, 3.8.1985, p.*5 ). That measure, which applies to all agricultural sectors, draws a distinction between principal, secondary and subordinate requirements .

The system of security is thus marked by less rigidity than was once the case .

D - Conclusion

For all the reasons set out above, I propose that the Court reply as follows to the question referred to it :

"Consideration of the question referred to the Court by the Verwaltungsgericht Frankfurt am Main has disclosed no factor of such a kind as to affect the validity of the second indent of Article 38*(1)*(c ) of Commission Regulation ( EEC ) No 3183/80 of 3 December 1980 ."

(*) Translated from the French .

( 1 ) Official Journal 1980, L*62, p.*5 .

( 2 ) Official Journal 1980, L*338, p.*1 .

( 3 ) Official Journal 1980, L*87, p.*42 .

( 4 ) Judgment of 4 May 1974 in Case 4/73 Nold v Commission (( 1974 )) ECR 491, paragraph 13 .

( 5 ) See, for example, the judgment of 16 December 1981 in Case 244/80 Foglia v Novello (( 1981 )) ECR 3045, paragraph 15; the judgment of 14 February 1984 in Case 278/82 Rewe v Hauptzollaemter Flensburg, Itzehoe and Luebeck-West (( 1984 )) ECR 721, pararaph 8; the judgment of 28 June 1984 in Case 180/83 Moser v Land Baden-Wuerttemberg (( 1984 )) ECR 2539, paragraph 6; the judgment of 12 June 1986 in Joined Cases 98, 162 and 258/85 Bertini and Another v Regione Lazio and Another (( 1986 )) ECR 1885, paragraph 8 .

( 6 ) Judgment of 17 December 1970 in Case 11/70 Internationale Handelsgesellschaft v Einfuhr - und Voratsstelle fur Getreide und Futtermittel (( 1970 )) ECR 1125 .

( 7 ) Case 117/83 (( 1984 )) ECR 3291, at p . 3302 .

( 8 ) See P . Tiedemann : "Das Kautionsrecht der EWG - ein verdecktes Strafrecht?", Neue Juristische Wochenschrift, 1983, pp.*2727-31 .

( 9 ) R . Barents : "The system of deposits in Community agricultural law : efficiency v proportionality", European Law Review, August 1985, pp . 239-249 .

( 10 ) Official Journal 1985, L*210, p.*29 .

( 11 ) See the article by P.Tiedemann, cited above, at p.*2727 .

( 12 ) Judgment of 14 May 1974 in Case 4/73 Nold v Commission (( 1974 )) ECR 491, at p . 508, paragraph 14 .

( 13 ) See in that regard the judgment of 17 December 1970 in Case 11/70 Internationale Handelsgesellschaft, cited above, paragraph 3, and the judgment of 8 October 1986 in Case 234/85 Staatsanwalt Freiburg v Keller (( 1986 )) ECR 2897, paragraph 7 .

( 14 ) Judgment of 17 May 1984 in Case 83/83 Estel v Commission (( 1984 )) ECR 2195; the Court mentioned the principle in the judgments of 28 March 1984 in Case 8/83 Bertoli v Commission (( 1984 )) ECR 1649, paragraph 27, and of 3 March 1982 in Case 14/81 Alpha Steel v Commission (( 1982 )) ECR 749, paragraph 29 .

( 15 ) Judgment of 5 February 1987 in Case 288/85 Hauptzollamt Hamburg-Jonas v Plange Kraftfutterwerke (( 1987 )) ECR 611, paragraph 14 .

( 16 ) Case 4/68 Schwarzwaldmilch v Einfuhr - und Vorratsstelle fuer Fette (( 1968 )) ECR 377, at p . 386 .

( 17 ) Official Journal, English Special Edition 1959-62, p.*87 .