1.

On 19 January 1977 the plaintiff in the main proceedings, Denkavit France, exported animal feed described as ‘Finisher C2’ from France to the United Kingdom. The amount invoiced was FF 48000 plus £200 in freight charges.

Since in trade in agricultural products between France and the United Kingdom use was made of the facility provided for by Article 2 of Regulation No 974/71, ( 2 ) namely payment by the exporting Member State of the monetary compensatory amounts payable by the importing Member State, the grant of the monetary compensatory amounts is conditional, pursuant to Article 11 (2) of Commission Regulation No 1380/75 of 20 May 1975, upon the production of proof that customs import formalities have been completed. Such proof is furnished primarily by production of the control copy provided for in Article 1 of Regulation (EEC) No 2315/69 of 19 November 1969, ( 3 ) which is known as Control Copy T5.

One such Control Copy T5 was completed on the exportation of the said animal feed but the original was never returned to the office of departure as required by Article 5 (4) of Regulation No 2315/69.

On 25 April 1977 Denkavit informed the defendant in the main proceedings, the Fonds d'orientation et de régularisation des marchés agricoles [Agricultural Markets Guidance and Stabilization Fund, hereinafter referred to as ‘the Fund’], in a letter which also referred to other export transactions, that the original of the control copy had not been returned. In a further letter of 4 November 1977 Denkavit sent the Fund copies of Control Copy T5, import certificate C10 and the invoice of 17 January 1977. Denkavit stated that the original of Control Copy T5 had been mislaid by the English customs authorities and at the same time inquired whether payment of the monetary compensatory amounts could be claimed in this way.

In a letter of 7 June 1978 the Fund drew Denkavit's attention to the need to establish a case of force majeure and to show that it had exercised all due care at the material time in producing either Control Copy T5 or documents equivalent thereto and in submitting, before the expir)' of the six-month period, a complete set of documents as required by the Community provisions. The letter also stated that an officer of the Fund had informed Denkavit on 10 November 1977 that the latter's application of 4 November 1977 could not be granted since the six-month period prescribed by Article 15 of Regulation No 1380/75 had not been observed, and that the documents produced on 4 November 1977 did not meet the requirements of Article 11 of Regulation No 1380/75, as amended by Regulation (EEC) No 1498/76. ( 4 )

On 29 August 1978 Denkavit made a claim to the Fund for payment of the monetary compensatory amounts and at the same time submitted equivalent documents. By letter of 1 September 1978 the Fund informed Denkavit that consideration of the documents furnished in support of the claim for payment of monetary compensatory amounts had not shown that all the requisite steps had been taken to obtain documents equivalent to Control Copy T5 which the United Kingdom customs authorities had mislaid. The Fund referred to its previous letter of 7 June 1978 and stated that it would reconsider the documents to establish whether it was possible, as soon as evidence was submitted showing that the necessary steps had been taken within the prescribed period of six months from the date of importation of the product, to overlook the fact that the claim was barred by lapse of time.

On 6 November 1978 Denkavit brought an action before the Tribunal administratif [Administrative Court], Paris, for an order setting aside the decision of the Fund of 1 September 1978 and requiring the Fund to pay it FF 19553.40 by way of monetary compensatory amounts, together with default interest. By judgment of 9 November 1984 the Tribunal administratif, Rouen, which had been designated as the court with territorial jurisdiction by order of the President of the Contentious Affairs Section of the Conseil d'Etat [State Council], requested the Court of Justice to give a preliminary ruling on two questions which are set out as follows in the statement of grounds of the judgment:

‘Is the rule that claims submitted out of time will not be entertained, laid down in Article 15 of Regulation (EEC) No 1380/75, contrary to the general principles of Community law in so far as it does not comply with the rule that penalties must be in proportion, and contrary to the spirit of the Community rules on payment of compensatory amounts?

If not, does the fact that Control Copy EC T5 was not returned constitute a case of force majeure within the meaning of the abovementioned articles and what conditions apply thereto?’

2.

At this point, I think it useful to cite the wording of the provisions of the regulation which are relevant in these proceedings.

Article 11 (2) of Commission Regulation No 1380/75 of 29 May 1975 reads as follows:

‘Payment by the exporting Member State of the monetary compensatory amount which should be granted by the importing Member State shall be conditional upon the production of proof that customs import formalities have been completed and that the duties and charges having equivalent effect payable in the importing Member State have been charged.

This proof shall be furnished by production of the control copy provided for in Article 1 of Regulation (EEC) No 2315/69 ...’.

Article 5 (4) of Regulation No 2314/69 reads as follows:

‘Without prejudice to the application of the provisions of Article 26 of Regulation (EEC) No 542/69, the control copy shall, after appropriate endorsement by the competent customs office of the Member State of destination ... be sent to the office of departure without delay ... ’.

Commission Regulation No 1498/76 added Article 11 (5) to Regulation No 1380/75, the first subparagraph of which reads as follows :

‘Where the control copy referred to in paragraph 2 is not returned to the office of departure or relevant central body within three months of its issue owing to circumstances beyond the control of the person concerned, the latter may make application to the competent agency for other documents to be accepted as equivalent, stating the grounds of such application and furnishing supporting documents. Such supporting documents shall include the transport document and the document whereby the product concerned is entered with the customs authorities for home use in the Member State of destination or a copy or photocopy thereof certified by the competent authorities.’

Article 15 of Regulation No 1380/75 provides that:

‘Except in cases of force majeure, no claim for payment of a monetary compensatory amount shall be entertained unless the relevant documents are submitted within six months following the day on which customs formalities were completed.’

3.

Denkavit, the plaintiff in the main proceedings, has made the following observations on those questions:

4.

The Fund, the defendant in the main proceedings, suggests that the questions submitted for a preliminary ruling should be answered in the negative.

1.

As I have already said in my Opinion of 10 October 1985 in Case 165/84, 8 there is an extensive body of case-law on the concept of force majeure. As far back as 11 July 1968 the Court stated in its judgment in Case 4/68 ( 9 ) that as the concept of force majeure is not identical in the different branches of law and the various fields of application, its significance must be determined on the basis of the legal framework within which it is intended to take effect. As regards the agricultural sector, the Court held in its judgment that an importer who has shown the necessary diligence is in principle released from the obligation to import when circumstances outside his control make it impossible for him to effect the importation within the required period. Such is the case when the event which renders impossible the performance in due time of a contract which, under normal circumstances, ought to have enabled the importer to fulfil his obligation to impon, is so unusual that it would have had to be considered as improbable by a prudent businessman exercising all due care. The concept of force majeure is not to be interpreted as implying absolute impossibility, but unusual difficulties which are independent of the will of the importer and which arise during the performance of the contract. Further, recognition of a case of force majeure presupposes that the consequences of the event could not have been avoided.

In his Opinion of 5 December 1979 in Joined Cases 154, 205, 206, 226 to 228, 263 and 264/78, 39, 31, 83 and 85/79 ( 10 ) Mr Advocate General Capotorti summarized the case-law of the Court on the application of the concept of force majeure in the agricultural sector as containing two elements: an objective element, namely the occurrence of an extraordinary event beyond the influence of the person concerned and, secondly, a subjective element, consisting in everything possible having been done by the person concerned, acting with care, prudence and diligence, in order to avoid the occurrence of that event.

In his Opinion of 17 November 1983 in Case 284/82 ( 11 ) Mr Advocate General Reischl stated that for force majeure to apply, it was important that all requisite care had been taken, whether there were circumstances outside the influence of the person under the obligation and whether an event was to be regarded as so unusual that its occurrence would have to be considered as improbable by a prudent person acting with the circumspection of a diligent businessman.

In its most recent published decision on the question of force majeure, namely the judgment of 9 February 1984 ( 12 ) the Court held that:

‘It is apparent from the established case-law of the Court that apart from special cases in specific areas in which it is used, the concept of force majeure essentially covers unusual circumstances which make it impossible for the relevant action to be carried out. Even though it does not presuppose absolute impossibility it nevertheless requires abnormal difficulties, independent of the will of the person concerned and apparently inevitable even if all due care is taken.’

Where, as in this particular case, the control copy has been mislaid by the authorities of the importing Member State and cannot therefore be returned to the customs office of departure, the following conclusions may be drawn from the aforementioned case-law:

The loss of an official document by the authorities is indisputably an event which is beyond the control of the trader. After clearance of the goods through the customs office of departure the trader no longer has any real power to dispose of the control copy. The document is initially in the possession of the authorities of the importing Member State and subsequently, if everything is in order, in the possession of the authorities of the exporting Member State.

The question arises, however, whether the loss of an official document transmitted by one authority to another is to be regarded as so unusual that its occurrence must be considered improbable. That question must, in my view, be answered in the negative.

No doubt, in a properly organized administrative department documents should not be mislaid. It must however be borne in mind that export transactions are not isolated events but frequent occurrences. Furthermore, the said control copies must be sent from the customs offices of one Member State to the customs offices of another Member State and must then be sent back. If in those circumstances from time to time documents are mislaid, that may be regrettable from the point of view of sound administration, but it cannot be regarded as so unusual or so unforeseeable an event as to be improbable. On the contrary, the adoption of Regulation No 1498/76 shows that such cases were envisaged by the Community legislature. According to the preamble to that regulation, it may happen that, owing to circumstances beyond the control of the party concerned, the control copy cannot be produced although the product has been entered for home use in the Member State of destination provided for. For that reason, the Commission has laid down that, where Control Copy T5 is not returned to the office of departure within three months of its issue, the person concerned may submit an application for other documents to be accepted as equivalent.

Hence the fact that a control copy has been mislaid by the authorities and cannot therefore be returned to the office of departure is not to be regarded as a case of force majeure within the meaning of Article 15 of Regulation No 1380/75.

The subjective element in the concept of force majeure, namely the question whether the person concerned has taken all the steps required to avoid the consequences of force majeure, need not therefore be discussed in further detail.

That finding, according to which the concept of force majeure is to be interpreted strictly and does not therefore cover all circumstances that are beyond the trader's control, is confirmed by the scheme of Regulation No 1380/75. Force majeure is the only exception to the rule in Article 15 which bars claims submitted out of time. Article 11 (5) however enables the trader to apply to have other documents accepted as equivalent in all circumstances beyond his control. Force majeure must therefore be given a different, narrower construction than that of circumstances beyond the control of the person concerned. If force majeure were to cover all circumstances beyond the trader's control, it would be impossible to explain why in one and the same regulation the same concept is designated by different expressions.

Thus the scheme of the regulation does not permit the concept of force majeure to be interpreted in the broad sense of all circumstances beyond the control of the person concerned.

2.

Before I turn to the question whether Article 15 of Regulation No 1380/75 is compatible with the general principles of Community law and, in particular, with the principle of proportionality, I think two preliminary observations are called for.

It is common ground that the plaintiff exported goods to the value of FF 48000, which confers entitlement to the payment of monetary compensatory amounts. The plaintiff estimated the amount of monetary compensatory amounts due to it as FF 19543.40, which is not disputed by the defendant.

The Member States were empowered to grant monetary compensatory amounts by Council Regulation No 974/71 of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States. I shall not consider in detail the particular conditions for the application of monetary compensatory amounts. I set out my views in that regard in extenso in the Opinion which I delivered on 14 May 1985 in Joined Cases 71 and 72/84 ( 13 ) before the Fourth Chamber of the Court. To summarize, the application of monetary compensatory amounts was considered only in cases where changes in the parities of the currencies might lead to a disturbance in trade in agricultural products. However, the reference margins for the calculation of the monetary compensatory amounts were defined anew by Regulation No 1112/73. ( 14 ) Henceforth the criterion was to be the disparity between the conversion rate used in the common agricultural policy and the conversion rate derived from the so-called central rate. The significance of monetary compensatory amounts has thus changed since their introduction. Initially they were conceived as an instrument to neutralize short-term fluctuations in currency rates, whilst later they were used to equalize the different price levels for agricultural products in the Community which arose from the application of different representative conversion rates for such products to agricultural prices uniformly expressed at first in units of account and subsequently in ECU. Monetary compensatory amounts have thus been transformed from an instrument for temporarily combating disturbances in agricultural trade resulting from currency fluctuations into an essential part of the common organization of the market. It was resolved to apply those amounts in order to enable intra-Community trade in agricultural products to continue in view of the existence of different national price levels for agricultural products in spite of the adoption of uniform prices expressed in ECU. That is quite apparent in this case where for goods to the value of approximately FF 48000 a monetary compensatory amount of FF 19000 was calculated, that is to say an amount representing more than 40% of the value of the goods.

According to the case-law of the Court, in order to establish whether a provision of Community law is consistent with the principle of proportionality it is necessary to establish, in the first place, whether the means it employs to achieve its aim correspond to the importance of the aim and, in the second place, whether they are necessary for its achievement. ( 15 )

The 14th recital in the preamble to Regulation No 1380/75 contains the following justification of the various time-limits laid down in the regulation:

‘Whereas, in the interests of sound administration, it seems desirable to require that application for payment of the compensatory amount be made within a reasonable period; whereas, in order to prevent distortions of competition between the trade interests concerned in the Member States, a time-limit should be laid down for payment of the compensatory amount; whereas the fact that in exceptional cases this time-limit cannot be respected should be taken into consideration’. ( 16 )

In its observations to the Court, the Commission has relied essentially upon the second sentence in that recital, stating that trade interests could obtain unjustified advantages in the absence of a uniform time-limit.

First it must be observed in that regard that the recital relating to distortions of competition between the trade interests concerned in the Member States refers to the time-limit accorded to the national authorities for payment of the monetary compensatory amounts. Distortions of competition to the detriment of trade interests could arise if there were any delay in payment of the monetary compensatory amounts, since traders would thus at the very least be confronted with different conditions relating to capital and interest. In this case, the monetary compensatory amounts were paid by the exporting State, that is France, as a result of an agreement between the Member States concerned. It is scarcely conceivable and therefore unlikely that a Member State whose exports are intended to be encouraged by the grant of monetary compensatory amounts would obstruct its own exports by delaying the payment of such amounts.

However, I have considerable misgivings as to whether that argument necessarily entails forfeiture of the right at issue in this case merely because the trader has submitted his claim for payment out of time. According to Article 8 (1) of Regulation No 1380/75, the monetary compensatory amount to be granted or levied is the amount applicable on the day of export or on the day of import. Thus if the rate at which the monetary compensatory amounts are to be paid is determined by the day of import or the day of export, I fail to see how the trader concerned can influence the amount due to him by lodging his claim out of time. A belated claim can only lead to a belated payment of the monetary compensatory amount and thus to a loss for the trader. Since however it is in the trader's own interest to receive the amounts due to him as soon as possible, it is difficult to see for what reason he should be encouraged, by the setting of a time-limit for the submission of claims, to act promptly in order to avoid distortions of competition.

Thus the only remaining justification for the rule in Article 15 of Regulation No 1380/75 which bars claims submitted out of time is the statement in the 14th recital of that regulation that a time-limit is in the interests of sound administration.

In that connection, it must certainly be acknowledged that the Commission itself and the national authorities have a legitimate interest in being able to close their files on certain administrative matters after a reasonable period. The Commission must therefore be entitled to prescribe that claims for the payment of monetary compensatory amounts must be submitted within a reasonable period, failing which certain penalties may be imposed. In that regard it must also be borne in mind that by Council Regulation No 2746/72 of 19 December 1972 ( 17 ) responsibility for the financing of monetary compensatory amounts was taken over by the Community. Consequently, the grant of monetary compensatory amounts involves not only a national administrative procedure but also a subsequent balancing of accounts between the Member State which grants the amounts and the Commission as part of the clearance of accounts in respect of the European Agricultural Guidance and Guarantee Fund.

For those reasons, it is certainly necessary to set certain time-limits for the submission of claims for the payment of monetary compensatory amounts and to ensure observance of such time-limits by the imposition of penalties. Nevertheless both the time-limits and the penalties must be in proportion to the aim pursued, namely sound administration.

The preamble to Commission Regulation No 1371/81 of 19 May 1981, ( 18 ) which partly replaced Regulation No 1380/75, gives rise to certain doubts as to whether the six-month period prescribed by Article 15 of that regulation is reasonable. The preamble to the former regulation contains the following recital:

‘Whereas experience has shown that the time-limit for submission of the relevant documents, if grants of monetary compensatory amounts are to be made, should be increased’.

Accordingly, Article 17 (2) of Regulation No 1371/81 contains the following provision :

‘Except in cases of force majeure, entitlement to the grant of monetary compensatory amounts shall be lost unless the relevant documents are submitted within the 12 months following the day on which the customs authorities accepted the import entry or the export declaration.’

It is also doubtful whether the penalty, namely complete forfeiture of the monetary compensatory amounts, is reasonable. In its judgment of 20 February 1979 in Case 122/78 ( 19 ) the Court stated that in a case where a security is lodged to obtain an import or export licence, forfeiture of the security is proportionate if the particular import or export transaction voluntarily entered into by the trader is not carried out. With regard to forfeiture of the security in the event of the submission of proof out of time, however, the Court held that:

‘On the other hand, the provisions of Article 3 of Regulation No 499/76, prompted by “administrative reasons”, provide not only for a period within which these proofs must be furnished but also the loss of the whole of the security in the event of failure to comply with that period.

That fixed penalty, which is applied to an infringement which is considerably less serious than that of failure to fulfil the obligation which the security itself is intended to guarantee, which is sanctioned by an essentially proportionate penalty, must therefore be held to be excessively severe in relation to the objectives of administrative efficiency in the context of the system of import and export licences.’

This case, which concerns forfeiture of the monetary compensatory amounts where the claim is submitted out of time, calls for the following remarks: the grant of monetary compensatory amounts does not depend on the existence of a relationship between a main and an ancillary obligation, in which non-fulfilment of either obligation attracts the same penalty. The two situations are however comparable, in so far as in both failure to carry out the export transaction is attended by the same legal consequences as the submission of the claim out of time, namely forfeiture of the monetary compensatory amounts.

A further peculiarity of this case is that, except in the case of force majeure, which, as I have already explained, does not arise here, the rule which bars claims submitted out of time is of general application, that is to say independently of whether or not the claim was out of time for reasons beyond the control of the trader concerned. In the latter case, however, the legal consequence provided for in Article 15 of Regulation No 1380/75, namely forfeiture of the monetary compensatory amounts, must be regarded as out of all proportion.

The fact that the trader may, under Article 11 (5) of Regulation No 1380/75, take steps after the expiry of the three-month period to obtain other equivalent documents in no way affects that finding. That provision gives the trader an option which, if exercised, can expedite his claim for the grant of monetary compensatory amounts. It is impossible in my view to infer from that option, which is provided for the trader's benefit, an obligation to obtain equivalent documents in the event of negligence on the part of the authorities. Moreover, Article 11 (5) of Regulation No 1380/75 not only confers an advantage on the trader but at the same time relieves the administration of the need to contend with applications by the trader to have other documents accepted as equivalent in the first three months after completion of customs formalities. Furthermore, the remaining period of three months is no doubt too short to enable the trader to take steps to obtain equivalent documents from the authorities of another Member State and to have those documents accepted by his own national authorities.

Finally, I wish to draw attention to a further inaccuracy in the wording of Article 15 of Regulation No 1380/75. Although I do not intend to take issue with the general wording of that provision, I nevertheless find it curious that in a Community regulation on intra-Community trade adopted in 1975, that is seven years after the establishment of the Customs Union, there is still mention of customs formalities. It is, however, precisely the concept of customs formalities which has led to further obscurities in this case. It is not clear which customs formalities are intended, whether customs export formalities or customs import formalities Moreover, the regulation leaves open the question of the time at which customs import formalities are completed. Article 8 contains a rule for customs export formalities, but there is no rule for customs import formalities, completion of which must be evidenced by Control Copy T5. Although that question has been answered by the national court itself and has thus not been referred to the Court in these proceedings, it must be pointed out that in the plaintiff's view customs formalities are not completed until Control Copy T5 is returned to the office of departure. According to that view, the correctness of which need not be considered here, the question of the interpretation of Article 15 simply did not arise since the period prescribed for the submission of claims could not have started to run owing to the failure to return the control copy.

Although the Community legislature is entitled to prescribe reasonable periods for the submissions of claims, it must make it quite clear when time starts to run. Moreover, the Commission has in the meantime recognized that the wording of Article 15 of Regulation No 1380/75 is imprecise. According to Article 17 (2) of Regulation No 1371/81 which replaced it, the period now runs from the day on which the customs authorities accepted the import entry or the export declaration.

To summarize, therefore, I have come to the conclusion that the rule in Article 15 of Regulation No 1380/75 is invalid in so far as it sets a time-limit for the submission of claims for monetary compensatory amounts even in cases where, although no force majeure is involved, the person concerned cannot submit the documents in support of his claim until they are out of time, for reasons which are beyond his control.

In those circumstances it is unnecessary to give a specific answer to the subsidiary question concerning the interpretation of the concept of force majeure.