61985J0015

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1 . MEASURES ADOPTED BY THE COMMUNITY INSTITUTIONS - PRESUMPTION OF VALIDITY - NON-EXISTENT MEASURE - CONCEPT

2 . MEASURES ADOPTED BY THE COMMUNITY INSTITUTIONS - WITHDRAWAL - UNLAWFUL MEASURES - CONDITIONS

1 . UNDER COMMUNITY LAW, AN ADMINISTRATIVE MEASURE, EVEN THOUGH IT MAY BE IRREGULAR, IS PRESUMED TO BE VALID UNTIL IT HAS BEEN PROPERLY REPEALED OR WITHDRAWN BY THE INSTITUTION WHICH ADOPTED IT . IF A MEASURE IS DEEMED TO BE NON-EXISTENT, THE FINDING MAY BE MADE, EVEN AFTER THE PERIOD FOR INSTITUTING PROCEEDINGS HAS EXPIRED, THAT THE MEASURE HAS NOT PRODUCED ANY LEGAL EFFECTS AND THAT CLASSIFICATION MUST THEREFORE, FOR REASONS OF LEGAL CERTAINTY WHICH ARE EVIDENT, BE RESTRICTED TO MEASURES WHICH EXHIBIT PARTICULARLY SERIOUS AND MANIFEST DEFECTS .

2 . THE WITHDRAWAL OF AN UNLAWFUL MEASURE IS PERMISSIBLE, PROVIDED THAT THE WITHDRAWAL OCCURS WITHIN A REASONABLE TIME AND PROVIDED THAT THE INSTITUTION WHICH ADOPTED IT HAS HAD SUFFICIENT REGARD TO HOW FAR THE ADDRESSEE OF THE MEASURE MIGHT HAVE BEEN LED TO RELY ON THE LAWFULNESS THEREOF . IF THOSE CONDITIONS ARE NOT FULFILLED, THE WITHDRAWAL IS CONTRARY TO THE PRINCIPLES OF LEGAL CERTAINTY AND OF THE PROTECTION OF LEGITIMATE EXPECTATIONS AND MUST THEREFORE BE ANNULLED .

IN CASE 15/85

CONSORZIO COOPERATIVE D' ABRUZZO, WHOSE REGISTERED OFFICE IS IN ORTONA, ACTING THROUGH ITS CHAIRMAN AND LEGAL REPRESENTATIVE FOR THE TIME BEING, FELICE PAOLUCCI, REPRESENTED BY GIOVANNI MARIA UBERTAZZI AND FAUSTO CAPELLI, OF THE MILAN BAR, AND BY ANTONIO MINUTOLO, OF THE LANCIANO BAR, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHAMBERS OF LOUIS SCHILTZ, 83 BOULEVARD GRANDE-DUCHESSE CHARLOTTE,

APPLICANT,

V

COMMISSION OF THE EUROPEAN COMMUNITIES, REPRESENTED BY ALBERTO PROZZILLO, LEGAL ADVISER AT THE COMMISSION, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF GEORGES KREMLIS, A MEMBER OF THE COMMISSION' S LEGAL DEPARTMENT, JEAN MONNET BUILDING, KIRCHBERG,

DEFENDANT,

APPLICATION FOR THE ANNULMENT OF THE COMMISSION' S DECISION OF 31 OCTOBER 1984 AMENDING THE DECISION OF 22 DECEMBER 1978 RELATING TO THE GRANT OF A CONTRIBUTION FROM THE EAGGF GUIDANCE SECTION TOWARDS A PROJECT DESCRIBED AS "CONSTRUCTION OF A REGIONAL CENTRE FOR THE PROCESSING OF GRAPE MUST AND FOR THE BOTTLING OF WINE IN THE MUNICIPALITY OF FRISA ( CHIETI )" ( PROJECT NO I/159/78 ),

THE COURT ( FIFTH CHAMBER )

COMPOSED OF : Y . GALMOT, PRESIDENT OF CHAMBER, G . BOSCO, U . EVERLING, R . JOLIET AND J . C . MOITINHO DE ALMEIDA, JUDGES,

ADVOCATE GENERAL : J . MISCHO

REGISTRAR : S . HACKSPIEL, ADMINISTRATOR

HAVING REGARD TO THE REPORT FOR THE HEARING AS AMENDED FOLLOWING THE HEARING ON 11 NOVEMBER 1986,

AFTER HEARING THE OPINION OF THE ADVOCATE GENERAL DELIVERED AT THE SITTING ON 11 DECEMBER 1986,

GIVES THE FOLLOWING

JUDGMENT

1 BY APPLICATION LODGED AT THE COURT REGISTRY ON 21 JANUARY 1985, THE CONSORZIO COOPERATIVE D' ABRUZZO ( HEREINAFTER REFERRED TO AS THE "CONSORZIO ") BROUGHT AN ACTION UNDER THE SECOND PARAGRAPH OF ARTICLE 173 OF THE EEC TREATY FOR THE ANNULMENT OF A COMMISSION DECISION OF 31 OCTOBER 1984 AMENDING A DECISION OF 22 DECEMBER 1978 RELATING TO THE GRANT OF A CONTRIBUTION FROM THE GUIDANCE SECTION OF THE EUROPEAN AGRICULTURAL GUIDANCE AND GUARANTEE FUND ( EAGGF ) TOWARDS A PROJECT DESCRIBED AS "CONSTRUCTION OF A REGIONAL CENTRE FOR THE PROCESSING OF GRAPE MUST AND FOR THE BOTTLING OF WINE IN THE MUNICIPALITY OF FRISA ( CHIETI )". IN ITS APPLICATION, THE CONSORZIO ALSO REQUESTS THE COURT TO HOLD THAT THE COMMISSION DECISION OF 7 APRIL 1982 AMENDING THE DECISION OF 22 DECEMBER 1978 IS VALID AND IRREVOCABLE AND TO ORDER THE COMMISSION TO PAY THE CONTRIBUTION IN THE AMOUNT FIXED BY THE DECISION OF 7 APRIL 1982 .

2 REFERENCE IS MADE TO THE REPORT FOR THE HEARING FOR A MORE DETAILED EXPOSITION OF THE FACTS AND THE SUBMISSIONS AND ARGUMENTS OF THE PARTIES, WHICH ARE MENTIONED OR DISCUSSED HEREINAFTER ONLY IN SO FAR AS IS NECESSARY FOR THE REASONING OF THE COURT .

3 IT IS CLEAR FROM THE DOCUMENTS BEFORE THE COURT THAT, ON THE BASIS OF ARTICLE 14 OF COUNCIL REGULATION ( EEC ) NO 355/77 OF 15 FEBRUARY 1977 ON COMMON MEASURES TO IMPROVE THE CONDITIONS UNDER WHICH AGRICULTURAL PRODUCTS ARE PROCESSED AND MARKETED ( OFFICIAL JOURNAL 1977, L*51, P.*1 ), AS AMENDED IN PARTICULAR BY COUNCIL REGULATION ( EEC ) NO 1361/78 OF 19 JUNE 1978 ( OFFICIAL JOURNAL 1970, L*166, P.*9 ), THREE SUCCESSIVE DECISIONS WERE ADOPTED BY THE COMMISSION CONCERNING THE GRANT OF A CONTRIBUTION BY THE EAGGF TOWARDS A SINGLE INVESTMENT PROJECT SUBMITTED BY THE CONSORZIO .

4 IN ITS FIRST DECISION OF 22 DECEMBER 1978, THE COMMISSION GRANTED FOR THAT PROJECT A CONTRIBUTION OF A MAXIMUM AMOUNT OF LIT*4*446*450*444, EQUAL TO 50% OF THE INVESTMENT THAT WAS TO BE TAKEN INTO CONSIDERATION . THE CONSORZIO ALTERED THE INITIAL PROJECT, WHICH DID NOT AFFECT THE PURPOSE OF THE INVESTMENT BUT REDUCED THE AMOUNT THEREOF, WHEREUPON THE COMMISSION ADOPTED A SECOND DECISION ON 7 APRIL 1982 AMENDING ITS FIRST DECISION OF 22 DECEMBER 1978 AND FIXING THE MAXIMUM CONTRIBUTION AT LIT*4*298*543*500 . ON 31 OCTOBER 1984 THE COMMISSION ADOPTED A THIRD DECISION WHICH IS THE SUBJECT-MATTER OF THESE PROCEEDINGS . THE THIRD DECISION DOES NOT REFER TO THE SECOND DECISION BUT IS IDENTICAL TO IT, EXCEPT IN SO FAR AS IT REDUCES THE MAXIMUM CONTRIBUTION TO LIT*3*343*181*208 .

5 THE CONSORZIO ADVANCES THREE SUBMISSIONS IN SUPPORT OF ITS ACTION AGAINST THE COMMISSION' S THIRD DECISION, NAMELY THAT IT DOES NOT STATE THE REASONS ON WHICH IT WAS BASED, THAT IT IS VITIATED BY A MISUSE OF POWERS AND THAT IT CONSTITUTES A BREACH OF THE FUNDAMENTAL PRINCIPLES OF LEGAL CERTAINTY AND OF THE PROTECTION OF LEGITIMATE EXPECTATIONS .

6 THE COMMISSION EXPLAINS THAT THE AMOUNT OF THE CONTRIBUTION FIXED BY THE DECISION OF 7 APRIL 1982 IS THE RESULT OF A TWOFOLD ERROR ON THE PART OF ITS STAFF . THE EXPERT RESPONSIBLE FOR EXAMINING THE MODIFIED PROJECT DID NOT CORRECTLY APPLY THE INTERNAL RULES FOR ESTABLISHING THE MAXIMUM CONTRIBUTION AVAILABLE FROM THE EAGGF UNDER COUNCIL REGULATION NO 355/77 . THUS HE DREW UP AN INITIAL DRAFT DECISION FIXING THE MAXIMUM CONTRIBUTION AT LIT*4*298*543*500, WHEREAS IF THE INTERNAL RULES HAD BEEN CORRECTLY APPLIED THE MAXIMUM CONTRIBUTION WOULD HAVE BEEN FIXED AT LIT*3*343*181*208 . A RECTIFIED DRAFT DECISION INDICATING THE LATTER AMOUNT WAS DRAWN UP AT ONCE, WAS APPROVED BY THE LEGAL DEPARTMENT AND THE DEPARTMENT RESPONSIBLE FOR FINANCIAL CONTROL, AND WAS SUBSEQUENTLY SUBMITTED TO THE EAGGF COMMITTEE AND THE STANDING COMMITTEE ON AGRICULTURAL STRUCTURE . HOWEVER, FOR REASONS WHICH HAVE STILL NOT BEEN EXPLAINED, THE FIRST DRAFT DECISION, ERRONEOUSLY INDICATING THE AMOUNT OF THE CONTRIBUTION AS LIT*4*298*543*500, WAS SUBMITTED TO THE MEMBER OF THE COMMISSION AUTHORIZED TO ADOPT THE DECISION ON THE COMMISSION' S BEHALF, WAS SIGNED BY HIM ON 7 APRIL 1982, AND WAS SUBSEQUENTLY NOTIFIED TO THE ITALIAN REPUBLIC AND THE CONSORZIO . THE COMMISSION DID NOT NOTICE THAT SECOND MISTAKE UNTIL THE FIRST PROGRESS REPORT ON THE WORK WAS EXAMINED IN 1984 .

7 THE COMMISSION MAINTAINS THAT, IN THOSE CIRCUMSTANCES, IT NEVER INTENDED TO GRANT A CONTRIBUTION OF THE SIZE SPECIFIED IN ITS DECISION OF 7 APRIL 1982 AND THAT THE LATTER DECISION IS NON-EXISTENT . IN THE ALTERNATIVE, THE COMMISSION ARGUES THAT, IN ORDER TO AVOID ANY DISCRIMINATION AMONGST THE RECIPIENTS OF EAGGF CONTRIBUTIONS, IT HAD THE POWER AND THE DUTY TO WITHDRAW AT ANY TIME ITS DECISION OF 7 APRIL 1982 AND TO REPLACE IT WITH A FRESH DECISION CONSISTENT WITH ITS INTERNAL RULES AND CORRESPONDING TO THE DRAFT ENDORSED BY THE STANDING COMMITTEE ON AGRICULTURAL STRUCTURE . FROM THAT POINT OF VIEW, THE COMMISSION CONSIDERS THAT THE PRINCIPLES OF LEGAL CERTAINTY AND OF THE PROTECTION OF LEGITIMATE EXPECTATIONS CANNOT BE RELIED UPON BY THE CONSORZIO TO CHALLENGE A DECISION WITHDRAWING AN EARLIER MEASURE . IN ITS VIEW, THE CONSORZIO WAS AWARE FROM THE OUTSET THAT THE DECISION OF 7 APRIL 1982 WAS INCORRECT AND UNLAWFUL . IN THAT REGARD, THE COMMISSION REFERS IN PARTICULAR TO A TELEX MESSAGE OF 6 NOVEMBER 1981 . IN THAT TELEX, THE COMMISSION INFORMED THE CONSORZIO OF ITS AGREEMENT IN PRINCIPLE WITH THE MODIFIED PROJECT, SUBJECT TO THE OPINION OF THE STANDING COMMITTEE ON AGRICULTURAL STRUCTURE AND THE COMMISSION' S APPROVAL, AND POINTED OUT THAT THIS WOULD LEAD TO "A REDUCTION IN THE CONTRIBUTION FROM LIT*4*446*MILLION TO LIT*3*343*MILLION, CALCULATED ON THE BASIS OF THE MAXIMUM ALLOWABLE COST ".

8 IT MUST BE EMPHASIZED AT ONCE THAT AN ERROR CONSISTING IN THE ADOPTION OF A DRAFT OTHER THAN THAT WHICH HAS PASSED THROUGH THE VARIOUS STAGES OF THE PREPARATORY PROCEDURE CANNOT INVALIDATE THE MEASURE ADOPTED EXCEPT IN SO FAR AS IT HAS RESULTED IN OBJECTIVE IRREGULARITIES . IN THIS CASE, THE ONLY OBJECTIVE IRREGULARITIES RELIED UPON BY THE COMMISSION ARE THE INFRINGEMENT OF THE INTERNAL RULES FOR ESTABLISHING THE MAXIMUM CONTRIBUTION AVAILABLE FROM THE EAGGF AND THE FACT THAT THE COMMISSION GRANTED A CONTRIBUTION OF A DIFFERENT AMOUNT FROM THAT ON WHICH THE MANAGEMENT COMMITTEE HAD GIVEN A FAVOURABLE OPINION, WITHOUT COMMUNICATING THE MEASURE CONCERNED TO THE COUNCIL AS REQUIRED BY ARTICLE 22 ( 3 ) OF COUNCIL REGULATION NO 355/77 .

9 IT IS NECESSARY TO CONSIDER WHETHER THOSE TWO IRREGULARITIES, ON THE ASSUMPTION THAT THEY ARE PROVEN AND THAT THEY BOTH CONSTITUTE LEGAL DEFECTS, ARE, AS THE COMMISSION MAINTAINS, SUCH AS TO RENDER THE DECISION OF 7 APRIL 1982 NON-EXISTENT . IF THEY ARE NOT, AND THE DECISION OF 7 APRIL 1982 IS MERELY VITIATED BY ILLEGALITY, THE DECISION OF 31 OCTOBER 1984 WOULD HAVE TO BE DESCRIBED AS A DECISION WITHDRAWING AN EARLIER MEASURE . IT WOULD THEN BE NECESSARY TO ASCERTAIN WHETHER SUCH WITHDRAWAL WAS CONTRARY TO THE PRINCIPLES OF LEGAL CERTAINTY AND OF THE PROTECTION OF LEGITIMATE EXPECTATIONS, WHICH ARE RELIED UPON BY THE CONSORZIO IN ITS THIRD SUBMISSION .

10 WITH REGARD TO THE ARGUMENT THAT THE DECISION OF 7 APRIL 1982 IS NON-EXISTENT, IT IS NECESSARY TO POINT OUT THAT UNDER COMMUNITY LAW, AS UNDER THE NATIONAL LAWS OF THE VARIOUS MEMBER STATES, AN ADMINISTRATIVE MEASURE, EVEN THOUGH IT MAY BE IRREGULAR, IS PRESUMED TO BE VALID UNTIL IT HAS BEEN PROPERLY REPEALED OR WITHDRAWN BY THE INSTITUTION WHICH ADOPTED IT . IF A MEASURE IS DEEMED TO BE NON-EXISTENT, THE FINDING MAY BE MADE, EVEN AFTER THE PERIOD FOR INSTITUTING PROCEEDINGS HAS EXPIRED, THAT THE MEASURE HAS NOT PRODUCED ANY LEGAL EFFECTS . FOR REASONS OF LEGAL CERTAINTY WHICH ARE EVIDENT, THAT CLASSIFICATION MUST CONSEQUENTLY BE RESTRICTED UNDER COMMUNITY LAW, AS UNDER THE NATIONAL LEGAL SYSTEMS WHICH PROVIDE FOR IT, TO MEASURES WHICH EXHIBIT PARTICULARLY SERIOUS AND MANIFEST DEFECTS .

11 WITHOUT THERE BEING ANY NEED EVEN TO CONSIDER THE GRAVITY OF THE TWO IRREGULARITIES ALLEGED BY THE COMMISSION, IT IS SUFFICIENT TO STATE THAT NEITHER OF THEM IS MANIFEST . NEITHER IRREGULARITY COULD BE DETECTED BY READING THE DECISION . THE INTERNAL RULES FOR ESTABLISHING THE MAXIMUM CONTRIBUTION AVAILABLE FROM THE EAGGF UNDER COUNCIL REGULATION NO 355/77 HAVE NOT BEEN PUBLISHED . HENCE, APART FROM THE COMMISSION OFFICIALS RESPONSIBLE FOR THE PROPER APPLICATION OF THOSE RULES, NO ONE WAS IN A POSITION TO ASCERTAIN BY READING THE DECISION OF 7 APRIL 1982 WHETHER OR NOT THOSE RULES HAD BEEN INFRINGED . THE SAME HOLDS TRUE FOR THE IRREGULARITY CONSISTING IN THE DISCREPANCY BETWEEN THE DRAFT DECISION SUBMITTED TO THE MANAGEMENT COMMITTEE AND THE DECISION ADOPTED ON 7 APRIL 1982 . ACCORDINGLY, THE DECISION OF 7 APRIL 1982 CANNOT BE CLASSIFIED AS NON-EXISTENT .

12 SINCE, THEREFORE, THE DECISION OF 31 OCTOBER 1984 CAN ONLY BE DESCRIBED AS A DECISION WITHDRAWING AN EARLIER MEASURE, IT REMAINS TO BE DETERMINED WHETHER IT SATISFIES THE REQUIREMENTS LAID DOWN BY THE COURT FOR THE WITHDRAWAL OF UNLAWFUL ADMINISTRATIVE MEASURES . IN THAT REGARD, IT MUST BE BORNE IN MIND, AS THE COURT HAS MOST RECENTLY HELD IN ITS JUDGMENT OF 3 MARCH 1982 IN CASE 14/81 ( ALPHA STEEL V COMMISSION (( 1982 )) ECR 749 ), THAT "THE WITHDRAWAL OF AN UNLAWFUL MEASURE IS PERMISSIBLE, PROVIDED THAT THE WITHDRAWAL OCCURS WITHIN A REASONABLE TIME AND PROVIDED THAT THE COMMISSION HAS HAD SUFFICIENT REGARD TO HOW FAR THE APPLICANT MIGHT HAVE BEEN LED TO RELY ON THE LAWFULNESS OF THE MEASURE ".

13 IT IS NECESSARY TO DETERMINE, IN THE FIRST PLACE, WHETHER IN THIS CASE THE COMMISSION HAS HAD SUFFICIENT REGARD TO HOW FAR THE CONSORZIO MIGHT HAVE BEEN LED TO RELY ON THE LAWFULNESS OF THE DECISION OF 7 APRIL 1982 .

14 THE COMMISSION IS WRONG TO RELY ON THE TELEX MESSAGE OF 6 NOVEMBER 1981 TO THE CONSORZIO IN SUPPORT OF ITS CONTENTION THAT THE APPLICANT WAS AWARE FROM THE OUTSET OF THE COMMISSION' S ERROR AND OF THE ILLEGALITY WHICH IT ENTAILED . THAT TELEX MESSAGE, WHICH PREDATES BY ALMOST SIX MONTHS THE DECISION THAT WAS LATER WITHDRAWN, SIMPLY INFORMED THE CONSORZIO OF THE FACT THAT A REDUCTION WOULD BE MADE IN THE AMOUNT OF THE CONTRIBUTION AND OF THE SIZE OF THAT REDUCTION . WHEN IT WAS INFORMED OF THE FINAL DECISION - IN RESPECT OF WHICH, MOREOVER, THAT TELEX MESSAGE MADE AN EXPRESS RESERVATION - THE CONSORZIO MIGHT VERY WELL HAVE ASCRIBED THE INCREASE IN THE CONTRIBUTION TO A CHANGE IN THE COMMISSION' S ATTITUDE . IN ANY EVENT THE CONSORZIO HAD NO WAY OF KNOWING THAT THE INCREASE IN THE AMOUNT OF THE CONTRIBUTION COMPARED WITH THE AMOUNT NOTIFIED TO IT IN THE TELEX MESSAGE WAS THE RESULT OF THE SUBSTITUTION OF AN INCORRECT DRAFT DECISION FOR THE RECTIFIED DRAFT, SINCE THE COMMISSION ITSELF IS, TO THIS DAY, UNABLE TO ACCOUNT FOR THAT SUBSTITUTION OF ONE MEASURE FOR ANOTHER . FURTHERMORE, AS HAS ALREADY BEEN EMPHASIZED, THE IRREGULARITIES TO WHICH, ACCORDING TO THE COMMISSION, THAT ERROR GAVE RISE WERE NOT OF A KIND AS TO BE DISCERNIBLE ON READING THE DECISION .

15 NEXT, IT IS NECESSARY TO CONSIDER WHETHER THE PERIOD OF OVER TWO YEARS WHICH ELAPSED BEFORE THE ADOPTION OF THE DECISION OF 31 OCTOBER 1984 MAY BE CONSIDERED REASONABLE WITHIN THE MEANING OF THE AFORESAID CASE-LAW .

16 THE ANSWER TO THAT QUESTION MUST BE IN THE NEGATIVE SINCE THE COMMISSION COULD HAVE ASCERTAINED, IN THE FIRST FEW DAYS FOLLOWING THE NOTIFICATION OF THE DECISION OF 7 APRIL 1982, THAT THE TEXT ADOPTED DID NOT CORRESPOND TO THE DRAFT WHICH HAD PASSED THROUGH THE PREPARATORY PROCEDURE .

17 IN THOSE CIRCUMSTANCES, THE WITHDRAWAL OF THE DECISION OF 7 APRIL 1982 BY THE DECISION OF 31 OCTOBER 1984 IS CONTRARY TO THE PRINCIPLES OF LEGAL CERTAINTY AND OF THE PROTECTION OF LEGITIMATE EXPECTATIONS AND MUST THEREFORE BE ANNULLED .

18 THE CONSORZIO' S OTHER TWO CLAIMS ARE INADMISSIBLE SINCE THE POWER TO ANNUL MEASURES CONFERRED UPON THE COURT BY ARTICLE 173 OF THE EEC TREATY DOES NOT AUTHORIZE IT EITHER TO CONFIRM COMMISSION DECISIONS OR TO ISSUE ORDERS TO THE COMMISSION .

COSTS

19 UNDER ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE, THE UNSUCCESSFUL PARTY IS TO BE ORDERED TO PAY THE COSTS . AS THE COMMISSION HAS BEEN UNSUCCESSFUL IN ITS MAIN SUBMISSIONS, IT MUST BE ORDERED TO PAY THE COSTS .

On those grounds,

THE COURT ( Fifth Chamber )

hereby :

( 1 ) Declares void the Commission' s decision of 31 October 1984;

( 2 ) Dismisses the remaining claims in the application;

( 3 ) Orders the Commission to pay the costs .