I —

This case concerns an action for damages brought under Article 178 and the second paragraph of Article 215 of the EEC Treaty by a German limited partnership against the Commission on the grounds that performance of a contract which it had entered into with the Romanian State undertaking ‘Prod-export’ was made excessively onerous by the effect of Council Regulation No 425/77 of 14 February 1977, published in the Official Journal of the European Communities on 5 March 1977.

Concluded on 15 February 1977, the contract concerned the delivery not of ‘seasoned bovine meat preparations’, which came before the Court in Case 68/77 IFG in which the Court gave judgment on 14 February 1978, but of 450 tonnes of marinated beef (‘Sauerbraten’) ready for cooking, or to put it more prosaically uncooked beef put up in sealed containers weighing not more than 1 kilogramme. The deliveries from the Romanian undertaking were to be spread over the period from April to December 1977 at the rate of approximately 50 tonnes per month.

In March 1975 the applicant firm had sought and obtained from the German authorities an official ruling as to tariff classification, indicating that the goods at issue came at the time within subheading 16.02 B III (b) 1 of the Common Customs Tariff; on importation into the Community the goods were liable to both autonomous and conventional ad valorem customs duty of 26 %, that is DM 1.30 per kg. A first consignment of about 10 tonnes of that meat, sent to test the market and not counting towards the 450 tonnes contracted for, was cleared into free circulation in the Federal Republic of Germany without any difficulty on 25050March 1977; no import licence had been obtained in respect of that consignment in accordance with Article 1 of Commission Regulation No 3117/76 of 21 December 1976 amending and repealing the linking systems introduced in the beef and veal sector, by way of protective measures, by Regulation's (EEC) No 76/76 and (EEC) No 223/76; the right or duty to obtain such a licence was reintroduced only as from 1 April 1977 (Article 15 of Council Regulation No 425/77).

The aforesaid Regulation No 425/77 made substantial amendments to the rules for trade with third countries as derived from Regulation No 805/68 of 27 June 1968 on the common organization of the market in beef and veal. Among other things, it makes provision (Article 3, amending Article 12 of Regulation No 805/68) for the levy to exceed the difference between the guide price and the free-at-Community-frontier offer price plus the amount of the customs duty; the levy exceeds 100 % when the Community market price is lower than 98 % of the guide price, which in certain respects is the threshold price for beef and veal.

These amendments made the contract entered into by the applicant quite uneconomic. In order to ‘arrive at a better definition of’ the products which may be imported free of levies, Regulation No 425/77 divided subheading 16.02 B III (b) 1 into two parts:

on the one hand

on the other hand

The first of these two subheadings was further defined in an Additional Note inserted by Article 14 (2) of Commission Regulation No 586/77 of 18 March 1977.

Consequently as from 1 April 1977, owing to this amendment of the terms of the Common Customs Tariff, the ‘bovine meat’ at issue became liable to a levy in addition to the 20 % customs duty in the circumstances laid down in Commission Regulation No 586/77. In this instance the levy amounted to DM 7.10 per kilogramme, which exceeded even the purchase price and was thus prohibitive. The applicant claims that it did not become aware of this new development until 4 April 1977, even though the Council regulation had been published on 5 March 1977 and the Commission regulation on 23 March 1977, after it had been informed by the German authorities that the official ruling as to tariff classification issued in 1975 was no longer valid. In consequence it immediately stopped importing the meat, and the other party to the contract is claiming a sum of DM 495000 from it for non-performance of the contract.

In a first letter sent to the Commission on 12 April 1977, the applicant asked the Commission to make special arrangements to enable it to fulfil its contract on acceptable terms. On 22 April it wrote again asking the Commission to adopt transitional measures on the basis of Article 7 of Regulation No 425/77 to allow it to import the quantities agreed upon with the Romanian undertaking free of the levy until 31 December 1977.

On 3 June 1977, a Head of Division at the Directorate General for Agriculture replied by a refusal.

The applicant claims primarily that the Court should declare that the Commission is required to guarantee performance of the contract concluded on 15 February 1977 (compensation in kind); in its reply, introducing a slight variation, it claims primarily that the Court should declare that the Commission is required to authorize the importation, free of the levy, of the quantity of meat stipulated in the contract of 15 February 1977 by adopting a decision ordering the Federal Republic of Germany to admit the quantity at issue free of the levy. In the alternative the applicant claims that the Court should order the Commission to make good the damage arising out of the failure to perform the contract, which it calculates at DM 787500, with interest at 8 % as from the date of the damage.

II —

The Commission first of all contends that the primary claim is inadmissible: it states that it is required to apply the existing rules and that an action for compensation cannot be used to obtain the adoption of a legislative measure involving an exception to those rules. Such an aim may be pursued only by way of Article 175 of the Treaty, which has not been pleaded in this case.

Although personally I agree with the views expressed by Mr Advocate General Capotorti in his opinion in the IFG case, and although I think that the applicant's primary claim is inadmissible in both of its forms, I propose on the authority of the Court's judgment of 14 February 1978 in the IFG case that the Court should examine the substance of the case before giving any ruling as to the admissibility of the primary claim. Both the primary claim and the claim in the alternative, (against which the Commission raises no objection of inadmissibility) have a common basis, in so far as they imply that the Commission has incurred liability through an unlawful measure or unlawful conduct on the part of the Community institutions.

However it seems to me that the case is misconceived from the outset in that the Commission is made the defendant to action for compensation for the damage allegedly caused by a measure in fan adopted by the Council. The applicant, which had brought its application against the Commission alone, attempted to bring the Council into the issue in its reply, but by an order of 10 November 1977 the Court refused its request. However it does not seem possible to me to order the Community to make good any damage caused principally by the Council in the exercise of its powers, when only the Commission has been called upon to answer the action brought for that purpose.

III —

IV —

It remains to be considered whether the introduction of a system of levies in respect of the products at issue is contrary to the combined provisions of Articles 39 and 110 of the Treaty, and especially to the rules as to binding in the General Agreement on Tariffs and Trade (GATT). It should be noted once again that this complaint is directed at Council Regulation No 425/77. Subject to any observations which the Council may make, I would make the following remarks:

According to the applicant, the placing of the prepared meat at issue under subheading 16.02 B III (b) I (aa) of the Common Customs Tariff is contrary to the binding of the rate of duty pertaining to subheading 16.02 B III (b) 1 under GATT. The binding expressly refers to the whole of that subheading. Moreover the new version of Article 17 of Regulation No 805/68 introduced by Regulation No 425/77 exactly corresponds to Article 16 of Regulation No 805/68, according to which ‘The provisions of this regulation shall be applied with due regard to the obligations under international agreements by which the Community is bound’. It is argued that the introduction of a levy in respect of certain products falling within that tariff subheading clearly breaches that provision.

In answer to the question which the Court put to it about this ‘unbinding’, the Commission states that the concession granted did not relate to the products at issue in this case and that the relevant point is rather the total economic and financial measure of the trade affected by the tariff negotiations.

I shall proceed no further with this discussion, because even assuming that it were proved that a unanimously adopted Council regulation had infringed the GATT rules and even if an individual can found an action on such an infringement, which I doubt, I consider that such infringement is not apt to give rise to liability on the part of the Commission.

However I would add that in the context of the common agricultural policy the Community must respect the various objectives set out in Article 39 of the Treaty, in particular: to stabilize markets (Article 39 (1) (c)), to assure the availability of supplies (Article 39 (1) (d)), to ensure that supplies reach consumers at reasonable prices (Article 39 (1) (e)). These objectives are 9themselves of differing degrees of importance and are not easy to reconcile. To ensure reasonable prices for consumers, it is necessary to simplify the agreements governing importation of beef and veal; this conflicts with the objective of stabilizing markets; similarly, to ensure better quality, it is necessary to encourage Community production of red meat, and this is also hardly compatible with the development of international trade. However, if the objectives set out in Article 39 are not easy to reconcile with one another, they are even more difficult to reconcile with the harmonious development of international trade sought by Article 110. Thus the Community must be able to put certain of these objectives before others, having regard to the economic and political situation. As Mr Advocate General Capotortï pointed out in his opinion in the IFG case, this involves arguments which are rather of a political nature.

Finally I would observe that the linking systems, introduced as protective measures, have been abolished as from 1 April 1977, and that unlike Yugoslavia for example, Romania is not bound to the Community by any commercial agreement; that country has not entered into any undertaking designed to limit its exports of beef and veal to the Community or to prevent abnormally low prices for such exports.

The date of 31 December 1977 and Article 7 were laid down essentially in order to deal with difficulties which might have arisen with the ACP countries and in order to allow the continuation until 31 December 1977 of measures reducing the non-tariff charges on imports by 90 % in exchange for the levying of a charge of an equivalent amount on exports by the ACP countries concerned.