Court of Justice of the European Communities (including Court of First Instance Decisions)

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Agriculture ° Common organization of the markets ° System of securities ° Force majeure ° Concept ° Official announcements of an international agreement concerning the regime for the import of maize into Spain ° Fall in the price of maize in that State ° Absence of force majeure vis-à-vis traders who had undertaken commitments pursuant to the Community regulations before the conclusion of the negotiations
(Council Regulations Nos 2913/86 and 1799/87; Commission Regulations No 2220/85, Art. 22, and No 3593/86)

Neither the measures adopted in Regulation No 1799/87 on special arrangements for imports of maize and sorghum into Spain from 1987 to 1990, nor the official announcements, in the early months of 1987, of the conclusion of the agreement between the European Economic Community and the United States of America, nor the Council Decision approving the Agreement between the European Economic Community and the United States of America for the conclusion of negotiations under GATT Article XXIV.6 constitutes a case of force majeure within the meaning of Article 22 of Regulation No 2220/85 laying down common detailed rules for the application of the system of securities for agricultural products.
Even though the concept of force majeure adopted by the agricultural regulations takes into account the particular nature of the public-law relationships between traders and the national administration, as well as the objectives of those regulations, so that it is not limited to absolute impossibility but must be understood in the sense of abnormal and unforeseeable circumstances, outside the control of the trader concerned, the consequences of which, in spite of the exercise of all due care, could not have been avoided except at the cost of excessive sacrifice, the events in question were by no means abnormal and unforeseeable for the traders who had undertaken, by providing a security, to import into Spain maize subsidized in accordance with the conditions laid down by Regulation No 3593/86. On the contrary, in the light of the information available at the time any reasonably well-informed trader could have realized that the question of imports of maize into Spain was one of the major issues in the negotiations with the United States of America and that an agreement was being actively sought in order to avoid a trade dispute.
Furthermore, the fall in maize prices which occurred at the beginning of 1987 on the Spanish market, which was not a sudden and unforeseeable reaction to the announcement of the agreement, must be regarded as an ordinary commercial risk and not as having made it absolutely impossible to put the subsidized maize into free circulation in Spain.

In Case C-136/93,
REFERENCE to the Court under Article 177 of the EEC Treaty by the Sala de lo Contencioso-Administrativo of the Audiencia Nacional for a preliminary ruling in the proceedings pending before that court between
Transáfrica SA
and
Administration of the Spanish State
on the interpretation of Article 22 of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products (OJ 1985 L 205, p. 5) and of Commission Regulation (EEC) No 3593/86 of 26 November 1986 on the granting of a subsidy for the import of maize into Spain (OJ 1986 L 334, p. 21),
THE COURT (Second Chamber),
composed of: F.A. Schockweiler, President of the Chamber, G.F. Mancini and J.L. Murray (Rapporteur), Judges,
Advocate General: W. Van Gerven,
Registrar: D. Louterman-Hubeau, Principal Administrator,
after considering the written observations submitted on behalf of:
° Transáfrica SA, by José Pérez Santos, of the Madrid Bar,
° the Spanish Government, by Alberto Navarro González, Director-General for Community Legal and Institutional Coordination, and Gloria Calvo Díaz, State Attorney, acting as Agents,
° the Commission of the European Communities, by Francisco Santaolalla, Legal Adviser, acting as Agent,
having regard to the Report for the Hearing,
after hearing the oral observations of Transáfrica SA, represented by Jaime Folguera Crespo, of the Madrid Bar, the Spanish Government and the Commission of the European Communities at the hearing on 3 March 1994,
after hearing the Opinion of the Advocate General at the sitting on 24 March 1994,
gives the following
Judgment

1 By order of 25 March 1993, received at the Court on 5 April 1993, the Sala de lo Contencioso-Administrativo (Chamber for Contentious Administrative Proceedings) of the Audiencia Nacional (National High Court) referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty two questions on the interpretation of Article 22 of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products (OJ 1985 L 205, p. 5) and of Commission Regulation (EEC) No 3593/86 of 26 November 1986 on the granting of a subsidy for the import of maize into Spain (OJ 1986 L 334, p. 21).
2 Those questions were raised in proceedings between Transáfrica SA (hereinafter "Transáfrica") and the Administración del Estado Español concerning the latter' s refusal to release the security provided pursuant to Article 2(3) of Regulation No 3593/86.
3 Following the accession of the Kingdom of Spain, the European Economic Community and the United States of America started negotiations under Article XXIV.6 of the General Agreement on Tariffs and Trade (hereinafter "GATT") with a view to establishing a new regime for the import of maize into Spain. In the course of those negotiations they reached an interim agreement on 1 July 1986, following which Council Regulation (EEC) No 2913/86 of 16 September 1986 introducing a derogation to Regulation (EEC) No 2727/75 as regards the import levy applicable to certain quantities of maize and grain sorghum (OJ 1986 L 272, p. 1) and Commission Regulation (EEC) No 3140/86 of 15 October 1986 on the issuing of an invitation to tender for the levy on imports of maize and sorghum from third countries (OJ 1986 L 292, p. 27) were adopted.
4 On 26 November 1986 the Commission, having observed that the high level of prices on the maize market in Spain had caused difficulties which were sufficiently serious to justify the introduction of transitional measures aimed at lowering the price of maize, adopted Regulation No 3593/86 on the basis of Article 90 of the Act of Accession.
5 That regulation provided for a subsidy of ECU 8 per tonne for maize imported into Spain by 31 May 1987. The maximum quantity which could qualify for the subsidy was 1 200 000 tonnes, of which half had to be from third countries and half from the other Member States with the exception of Portugal. In order to receive the subsidy, importers were required to lodge an application indicating the quantity which they undertook to import, accompanied by a security of ECU 8 per tonne. The Spanish intervention agency was required to issue documents giving entitlement to the subsidy. Those documents were valid for imports of maize made up to the end of the second month after the date for lodging applications but not beyond 31 May 1987. The subsidy was to be paid after the imported maize had been released for free circulation in Spain.
6 Article 5 of that regulation provided that the security was to be released in respect of quantities for which the application was not accepted and quantities released for free circulation in Spain during the period of validity of the document giving entitlement to the subsidy on submission of that document to the Spanish intervention agency within two months of its expiry date, and that that requirement was a primary requirement within the meaning of Article 20 of Regulation No 2220/85, cited above.
7 As regards breach by the importer of a primary requirement, Article 22 of Regulation No 2220/85, as amended by Article 1(3) of Commission Regulation (EEC) No 1181/87 of 29 April 1987 amending Regulation (EEC) No 2220/85 laying down common detailed rules for the application of the system of securities for agricultural products (OJ 1987 L 113, p. 31), provided that a "security shall be forfeit in full for the quantity for which a primary requirement is not fulfilled, unless force majeure prevented fulfilment".
8 Pursuant to Regulation No 3593/86, Transáfrica applied on 1 and 2 December 1986 to the Servicio Nacional de Productos Agrarios (National department for agricultural products, hereinafter "SENPA"), a department of the Spanish Ministry of Agriculture, for a subsidy for the release for free circulation in Spain of 125 000 tonnes of maize from within the Community. The application was accompanied by the corresponding security. On 10 December 1986 SENPA issued the subsidy documents, which required Transáfrica to import the agreed quantity by 28 February 1987 at the latest.
9 At the end of January 1987 it was announced that the Community and the United States of America had reached an agreement which concluded the abovementioned negotiations, approved on behalf of the Community by Council Decision 87/224/EEC of 30 January 1987 concerning the Agreement between the European Economic Community and the United States of America for the conclusion of negotiations under GATT Article XXIV.6 (OJ 1987 L 98, p. 1). By that agreement, the Community undertook to ensure an annual level of imports into Spain between 1987 and 1990 of two million tonnes of maize from third countries. On 25 June 1987 Council Regulation (EEC) No 1799/87 of 25 June 1987 on special arrangements for imports of maize and sorghum into Spain from 1987 to 1990 (OJ 1987 L 170, p. 1) was adopted to implement the agreement with the United States; the rules implementing that regulation were laid down by Commission Regulation (EEC) No 2059/87 of 13 July 1987 setting implementing rules for the special arrangement for maize and sorghum imports into Spain during the period 1987 to 1990 (OJ 1987 L 193, p. 6).
10 On 16 February 1987 Transáfrica, which had imported 31 587.62 tonnes of the 125 000 tonnes agreed, asked SENPA to release it from the obligation to import the balance of the agreed quantity and return the security relating thereto, claiming that the conclusion of the abovementioned agreement had caused a fall in maize prices which constituted a case of force majeure extinguishing its obligation. On 14 September 1987 SENPA rejected that request. Transáfrica appealed to the Minister for Agriculture but SENPA' s decision was confirmed by ministerial decree of 6 September 1988. On 11 November 1988 Transáfrica brought an administrative action before the Audiencia Nacional challenging that ministerial decree.
11 In the course of those proceedings the Sala de lo Contencioso-Administrativo of the Audiencia Nacional sought a preliminary ruling from the Court of Justice on the following questions:
"1. Can the measures adopted in Council Regulation (EEC) No 1799/87 of 25 June 1987 concerning arrangements for imports of maize into Spain from 1987 to 1990, by reason of the fact that they may lead to a reduction in the price of maize, adversely affect and hinder fulfilment of obligations entered into in return for subsidies granted for the import of maize into Spain under Commission Regulation (EEC) No 3593/86 of 26 November 1986 and thus constitute a case of force majeure making it impossible to comply with the obligations to release maize for free circulation and resulting in entitlement to the release of the security provided?
2. Can the official announcements of the Agreements between the EEC and the United States of America and the outcome of the GATT negotiations in the early months of 1987 on the undertaking concerning annual imports of maize and sorghum during the period 1987 to 1990, even before they were enshrined in written provisions, result in unavoidable and unforeseeable consequences to the extent of making compliance with a primary requirement impossible or difficult, constituting a case of force majeure which can be relied on for the purposes of Article 22 of Commission Regulation (EEC) No 2220/85 of 22 July 1985?"
12 Those questions seek guidance as to whether the measures adopted by Regulation No 1799/87, cited above, or the official announcements in the early months of 1987 of the conclusion of the agreement between the Community and the United States of America, or Council Decision 87/224, cited above, constitute a case of force majeure within the meaning of Article 22 of Regulation No 2220/85, cited above.
13 As the Advocate General notes in point 17 of his Opinion, Regulation No 1799/87, adopted in June 1987, could not have had the slightest effect on compliance with an obligation which should have been carried out in February 1987.
14 The Court has consistently held that the concept of force majeure adopted by the agricultural regulations takes into account the particular nature of the public-law relationships between traders and the national administration, as well as the objectives of those regulations. It follows that the concept of force majeure is not limited to absolute impossibility but must be understood in the sense of abnormal and unforeseeable circumstances, outside the control of the trader concerned, the consequences of which, in spite of the exercise of all due care, could not have been avoided except at the cost of excessive sacrifice (see, most recently, the judgment in Case C-124/92 An Bord Bainne Co-operative and Compagnie Inter-Agra v Intervention Board for Agricultural Produce [1993] ECR I-5061, paragraph 11).
15 The official announcements of the agreement between the Community and the United States of America and the conclusion of that agreement must be regarded as circumstances outside the control of the trader concerned.
16 However, in a case such as that in the main proceedings, the other conditions referred to in the Court' s case-law cannot be considered to have been met. The facts found by the court making the reference show that the conclusion of the agreement between the Community and the United States of America was by no means an abnormal and unforeseeable event for the traders concerned. The negotiations between the Community and the United States of America took place over several months and Regulation No 2913/86, cited above, referred moreover to an interim solution found on 1 July 1986. Even the press articles concerning those negotiations, to which Transáfrica referred before the court making the reference, show that any reasonably well-informed trader could have realized that the question of imports of maize into Spain was one of the major issues in those negotiations and that an agreement was being actively sought in order to avoid a trade dispute.
17 As for Transáfrica' s argument that the fall in maize prices made it impossible or extremely difficult for it to fulfil its obligation to release the subsidized maize into free circulation in Spain, that fall in price was not a sudden and unforeseeable reaction to the announcement of the agreement between the Community and the United States of America. In any event, such a fall in price cannot be considered to make it absolutely impossible to put the subsidized maize into free circulation in Spain, but rather constitutes an ordinary commercial risk.
18 The answer to the questions referred is accordingly that neither the measures adopted by Council Regulation (EEC) No 1799/87 of 25 June 1987 on special arrangements for imports of maize and sorghum into Spain from 1987 to 1990, nor the official announcements, in the early months of 1987, of the conclusion of the agreement between the European Economic Community and the United States of America, nor Council Decision 87/224/EEC of 30 January 1987 concerning the Agreement between the European Economic Community and the United States of America for the conclusion of negotiations under GATT Article XXIV.6 constitutes a case of force majeure within the meaning of Article 22 of Regulation No 2220/85, cited above.

Costs
19 The costs incurred by the Spanish Government and the Commission of the European Communities, which have submitted observations to the Court, are not recoverable. Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court.

On those grounds,
THE COURT (Second Chamber),
in answer to the questions referred to it by the Sala de lo Contencioso-Administrativo of the Audiencia Nacional, by order of 25 March 1993, hereby rules:
Neither the measures adopted by Council Regulation (EEC) No 1799/87 of 25 June 1987 on special arrangements for imports of maize and sorghum into Spain from 1987 to 1990, nor the official announcements, in the early months of 1987, of the conclusion of the agreement between the European Economic Community and the United States of America, nor Council Decision 87/224/EEC of 30 January 1987 concerning the Agreement between the European Economic Community and the United States of America for the conclusion of negotiations under GATT Article XXIV.6 constitutes a case of force majeure within the meaning of Article 22 of Commission Regulation (EEC) No 2220/85 of 22 July 1985 laying down common detailed rules for the application of the system of securities for agricultural products.