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Judgment of the Court of 4 July 1963. - Federal Republic of Germany v Commission of the European Economic Community. - Case 24-62. European Court reports French edition Page 00131 Dutch edition Page 00137 German edition Page 00143 Italian edition Page 00129 English special edition Page 00063 Danish special edition Page 00407 Greek special edition Page 00911 Portuguese special edition Page 00251 Spanish special edition Page 00383

Summary Parties Subject of the case Grounds Decision on costs Operative part

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1 . COMMON CUSTOMS TARIFF - DEROGATORY PROVISIONS - OBJECT OF ARTICLE 25 OF THE EEC TREATY

( EEC TREATY, ARTICLE 25 )

3 . MEASURES ADOPTED BY INSTITUTIONS OF THE COMMUNITY - STATEMENT OF REASONS - OBJECT

( EEC TREATY, ARTICLE 190 )

4 . MEASURES ADOPTED BY INSTITUTIONS OF THE COMMUNITY - STATEMENT OF REASONS - CONTENT AND FORM

( EEC TREATY, ARTICLE 190 )

1 . ARTICLE 25 OF THE EEC TREATY PROVIDES POSSIBILITIES OF OBTAINING EXEMPTIONS FROM THE FUNDAMENTAL PROVISIONS OF ARTICLES 2, 3 AND 9 WITH A VIEW TO REMEDYING DIFFICULTIES WHICH MAY RESULT, IN CONNECTION WITH SUPPLYING THE DEMANDS OF A MEMBER STATE, FROM THE ALIGNMENT OF NATIONAL DUTIES WITH THOSE OF THE COMMON CUSTOMS TARIFF .

2 . THE DISCRETIONARY POWER CONFERRED UPON THE COMMISSION BY ARTICLE 25 MUST BE EXERCISED WITHIN THE FRAMEWORK OF THE FUNDAMENTAL RULES OF ARTICLES 2 AND 3 IN ACCORDANCE WITH THE CRITERIA OF ARTICLE 29 OF THE TREATY . IT FOLLOWS FROM THE WORDING AND THE GENERAL SCHEME OF ARTICLE 25 THAT THIS POWER IS IN NO WAY FETTERED .

3 . BY IMPOSING UPON THE COMMISSION THE OBLIGATION TO STATE REASONS FOR ITS MEASURES, ARTICLE 190 IS NOT TAKING MERE FORMAL CONSIDERATIONS INTO ACCOUNT BUT SEEKS TO GIVE AN OPPORTUNITY TO THE PARTIES OF DEFENDING THEIR RIGHTS, TO THE COURT OF EXERCISING ITS SUPERVISORY FUNCTIONS, AND TO MEMBER STATES AND TO ALL INTERESTED NATIONALS OF ASCERTAINING THE CIRCUMSTANCES IN WHICH THE COMMISSION HAS APPLIED THE TREATY .

4 . FOR THE PURPOSE OF STATING THE REASONS FOR A MEASURE IT IS SUFFICIENT TO SET FORTH IN A CONCISE, BUT CLEAR AND RELEVANT MANNER, THE PRINCIPAL ISSUES OF LAW AND OF FACT UPON WHICH IT IS BASED AND WHICH ARE NECESSARY IN ORDER THAT THE REASONING WHICH HAS LED THE COMMISSION TO ITS DECISION MAY BE UNDERSTOOD .

IN CASE 24/62

GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY, REPRESENTED BY ARVED DERINGER, ADVOCATE AT THE OBERLANDESGERICHT AT COLOGNE, ACTING AS AGENT, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE CHANCERY OF THE EMBASSY OF THE FEDERAL REPUBLIC OF GERMANY, 3 BOULEVARD ROYAL, APPLICANT,

V

COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY, REPRESENTED BY HUBERT EHRING, LEGAL ADVISER OF THE EUROPEAN EXECUTIVES, ACTING AS AGENT, ASSISTED BY HANS PETER IPSEN, PROFESSOR OF THE UNIVERSITY OF HAMBURG, WITH AN ADDRESS FOR SERVICE IN LUXEMBOURG AT THE OFFICE OF HENRI MANZANARES, SECRETARY OF THE LEGAL SERVICE OF THE EUROPEAN EXECUTIVES, 2 PLACE DE METZ, DEFENDANT,

APPLICATION FOR THE ANNULMENT OF A DECISION OF THE COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY OF 11 MAY 1962, PUBLISHED IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES OF 9 JUNE 1962, TO THE EXTENT THAT IT REFUSES A REQUEST BY THE APPLICANT FOR THE GRANT, IN RESPECT OF THE YEAR 1962, OF A TARIFF QUOTA OF 450 000 HECTOLITRES OF WINE INTENDED FOR DISTILLATION;

THE GOVERNMENT OF THE FEDERAL REPUBLIC OF GERMANY REQUESTED THE GRANT OF A TARIFF QUOTA OF 450 000 HECTOLITRES OF WINE AND THE COMMISSION BY ITS DECISION OF 11 MAY 1962 ALLOWED THIS REQUEST TO THE EXTENT OF 100 000 HECTOLITRES BUT REFUSED IT AS TO THE REMAINDER .

THE FEDERAL REPUBLIC OF GERMANY INSTITUTED PROCEEDINGS AGAINST THIS DECISION, IN WHICH IT ALLEGED AN INFRINGEMENT OF THE TREATY, INSUFFICIENCY OF REASONS AND MISUSE OF POWER, SUBMITTING IN PARTICULAR THAT THIS DECISION INFRINGES ARTICLE 25 OF THE TREATY, WHICH REQUIRES THE COMMISSION TO GRANT THE WHOLE QUOTA REQUESTED AS SOON AS IT HAS BEEN ESTABLISHED THAT THERE IS NO DANGER OF SERIOUS DISTURBANCE, AND ALSO ARTICLE 29 WHICH REQUIRES THE COMMISSION TO BE GUIDED BY THE NEED TO PROMOTE TRADE WITH THIRD COUNTRIES .

FOR THE PURPOSE OF EXAMINING THESE COMPLAINTS, IT IS IMPORTANT TO PLACE THE ABOVE-MENTIONED ARTICLES WITHIN THE CONTEXT OF THE TREATY AS A WHOLE AND TO CONSIDER, IN RELATION TO THE FUNDAMENTAL PROVISIONS OF ARTICLES 2, 3 AND 9, AND THE GUIDING PRINCIPLES OF ARTICLE 29, THE POWER VESTED IN THE COMMISSION BY ARTICLE 25 TO EVALUATE THE LEGALITY AND THE EXPEDIENCY OF THE GRANT APPLIED FOR .

ARTICLE 25 CONTAINS DEROGATIONS FROM THE COMMON EXTERNAL TARIFF, WHICH CONSTITUTES ONE OF THE 'FOUNDATIONS' OF THE COMMUNITY PROVIDED FOR BY ARTICLE 3 AND SET UP BY ARTICLES 18 ET SEQ ., FROM WHICH THE SAID ARTICLE 25 ALLOWS EXEMPTIONS ONLY UNDER SPECIFIC CONDITIONS .

ARTICLE 9, WHICH OPENS THE SECOND PART OF THE TREATY DEALING WITH 'THE FOUNDATIONS OF THE COMMUNITY' SPECIFIES, MOREOVER, THAT THE COMMUNITY 'SHALL BE BASED' UPON A CUSTOMS UNION, THEREBY IMPLYING THE ADOPTION BY MEMBER STATES OF 'A COMMON CUSTOMS TARIFF IN THEIR RELATIONS WITH THIRD COUNTRIES '. ARTICLE 25 PROVIDES AN EXCEPTION TO THIS COMMON TARIFF WITH A VIEW TO REMEDYING DIFFICULTIES WHICH MAY RESULT FROM THE ALIGNMENT OF NATIONAL DUTIES WITH THOSE OF THE COMMON CUSTOMS TARIFF IN SUPPLYING THE DEMANDS OF A MEMBER STATE .

THIS INTERPRETATION IS ALL THE MORE IMPERATIVE SINCE ARTICLE 25 DEROGATES FROM ARTICLE 2, WHICH PROVIDES FOR THE ESTABLISHMENT OF A SINGLE MARKET, THE PURPOSE OF WHICH IS TO CAUSE MEMBER STATES TO DEVELOP THEIR ECONOMIC RELATIONSHIPS WITHIN THE COMMUNITY .

THE COMMISSION WAS OBLIGED TO ADHERE TO THESE RULES WHICH ARE UNAFFECTED BY THE DECLARATIONS OF 2 MARCH 1960 REFERRING TO ARTICLE 25 . IN ARRIVING AT ITS DECISIONS, IT MUST BE GUIDED BY THE WHOLE OF THE CONSIDERATIONS SET OUT IN ARTICLE 29, WHILST HAVING REGARD TO THE FUNDAMENTAL RULES OF ARTICLES 2 AND 3 . IT IS WITHIN THE FRAMEWORK OF THESE PRINCIPLES THAT THE DISCRETIONARY POWER GRANTED TO THE COMMISSION BY ARTICLE 25 MUST BE EXERCISED .

TAKEN AS A WHOLE, THIS ARTICLE IMPLIES THAT THE COMMISSION HAS A DUTY TO EVALUATE THE STATE OF THE MARKET FOR THE PRODUCTS CONCERNED AND THE DIFFICULTIES ENCOUNTERED IN CONNECTION WITH SUPPLYING THE DEMANDS OF THE MEMBER STATE WHICH HAS MADE THE REQUEST FOR ARTICLE 25 ( 3 ) TO BE APPLIED . IT MUST, IN ADDITION, ASCERTAIN WHETHER THE SPECIAL PRECONDITION OF THAT PROVISION HAS BEEN SATISFIED, ACCORDING TO WHICH THE COMMISSION HAS A DUTY TO CONSIDER THE NATURE OF ANY DISTURBANCE, ITS SERIOUSNESS AND ITS LIKELIHOOD . FINALLY, HAVING FOUND THAT THE SAID ARTICLE 25 ( 3 ) IS APPLICABLE, THE COMMISSION, GUIDED BY THE PRINCIPLES MENTIONED ABOVE, AND BY THE CRITERIA LAID DOWN IN ARTICLE 29, 'MAY' STILL EVALUATE THE EXPEDIENCY AND AMOUNT OF ANY QUOTA .

IT FOLLOWS, THEREFORE, FROM THE WORDING AND THE GENERAL SCHEME OF ARTICLE 25, THAT THE COMMISSION'S DISCRETIONARY POWER, WHICH IT EXERCISES INDEPENDENTLY WITHIN THE LIMITS LAID DOWN BY THE TREATY AND SUBJECT TO REVIEW BY THE COURT, IS IN NO WAY FETTERED .

ALTHOUGH IT APPEARS THAT THESE RULES HAVE NOT BEEN DISREGARDED, THE APPLICANT ON THE OTHER HAND RIGHTLY SUBMITS THAT THE STATEMENT OF REASONS FOR THE DECISION IS DEFICIENT AND THAT THEREFORE ARTICLE 190 IS CONTRAVENED .

IN IMPOSING UPON THE COMMISSION THE OBLIGATION TO STATE REASONS FOR ITS DECISIONS, ARTICLE 190 IS NOT TAKING MERE FORMAL CONSIDERATIONS INTO ACCOUNT BUT SEEKS TO GIVE AN OPPORTUNITY TO THE PARTIES OF DEFENDING THEIR RIGHTS, TO THE COURT OF EXERCISING ITS SUPERVISORY FUNCTIONS AND TO MEMBER STATES AND TO ALL INTERESTED NATIONALS OF ASCERTAINING THE CIRCUMSTANCES IN WHICH THE COMMISSION HAS APPLIED THE TREATY . TO ATTAIN THESE OBJECTIVES, IT IS SUFFICIENT FOR THE DECISION TO SET OUT, IN A CONCISE BUT CLEAR AND RELEVANT MANNER, THE PRINCIPAL ISSUES OF LAW AND OF FACT UPON WHICH IT IS BASED AND WHICH ARE NECESSARY IN ORDER THAT THE REASONING WHICH HAS LED THE COMMISSION TO ITS DECISION MAY BE UNDERSTOOD . APART FROM GENERAL CONSIDERATIONS, WHICH APPLY WITHOUT DISTINCTION TO OTHER CASES, OR WHICH ARE CONFINED TO REPEATING THE WORDING OF THE TREATY, THE COMMISSION HAS BEEN CONTENT TO RELY UPON 'THE INFORMATION COLLECTED', WITHOUT SPECIFYING ANY OF IT, IN ORDER TO REACH A CONCLUSION 'THAT THE PRODUCTION OF THE WINES IN QUESTION IS AMPLY SUFFICIENT '.

THIS ELLIPTICAL REASONING IS ALL THE MORE OBJECTIONABLE BECAUSE THE COMMISSION GAVE NO INDICATION, AS IT DID BELATEDLY BEFORE THE COURT, OF THE EVOLUTION AND SIZE OF THE SURPLUSES, BUT ONLY REPEATED, WITHOUT EXPANDING THE REASONS FOR IT, THE SAME STATEMENT 'THAT THERE WAS NO INDICATION THAT THE EXISTING MARKET SITUATION WITHIN THE COMMUNITY DID NOT ALLOW THESE BRANCHES OF THE INDUSTRY IN THE GERMAN FEDERAL REPUBLIC A SUPPLY WHICH IS ADEQUATE IN QUANTITY AND IN QUALITY '. ON THE OTHER HAND, ALTHOUGH IT MAINTAINED THAT THE PRODUCTION OF THE COMMUNITY WAS SUFFICIENT, THE COMMISSION RESTRICTED ITSELF TO 'DEDUCING FROM THIS' THAT 'THE GRANT OF A TARIFF QUOTA OF THE VOLUME REQUESTED MIGHT THEREFORE LEAD TO SERIOUS DISTURBANCES OF THE MARKET IN THE PRODUCTS IN QUESTION', BUT THESE DISTURBANCES WERE NOT SPECIFIED . THUS IT NEITHER DESCRIBED THE RISK INVOLVED IN THIS CASE, NOR DID IT DISCLOSE WHAT IT CONSIDERED TO BE THE NECESSARY AND SUFFICIENT CONNEXION IN THE PRESENT CASE BETWEEN THE TWO CONCEPTS WHICH IT LINKS ONE WITH THE OTHER BY A SIMPLE DEDUCTION . HOWEVER, BY GRANTING A RESTRICTED QUOTA NOTWITHSTANDING ITS DESCRIPTION OF PRODUCTION AS 'AMPLY SUFFICIENT', AND THEREBY ADMITTING THAT ARTICLE 25 ( 3 ) APPLIED, THE COMMISSION THUS CONCEDED THAT THIS FACTOR WAS NOT ENOUGH TO MAKE IT POSSIBLE 'TO DEDUCE FROM IT' THE RISK OF SERIOUS DISTURBANCE .

THUS THE STATEMENT OF REASONS EXPRESSED APPEARS ON THIS POINT TO BE CONTRADICTORY, SINCE IN SPITE OF ITS STATEMENT WITH REGARD TO AN ADEQUATE SUPPLY AND OF THE AUTOMATIC CONCLUSION TO BE DRAWN THEREFROM THE COMMISSION GRANTS A QUOTA AND THEREBY IMPLIES THAT IT WOULD NOT CAUSE ANY SERIOUS DISTURBANCE . MOREOVER, SEVERAL OF THE RECITALS IN THE GERMAN TEXT, WHICH IS AUTHENTIC, LACK THE NECESSARY CLARITY .

IT FOLLOWS FROM THESE FACTORS THAT THE INADEQUACY, THE VAGUENESS AND THE INCONSISTENCY OF THE STATEMENT OF REASONS FOR THE DECISION, BOTH IN RESPECT OF THE REFUSAL OF THE QUOTA REQUESTED AND OF THE CONCESSION OF THE QUOTA, GRANTED, DO NOT SATISFY THE REQUIREMENTS OF ARTICLE 190 .

THOSE PARTS OF THE DECISION WHICH HAVE BEEN SUBMITTED TO THE COURT MUST THEREFORE BE ANNULLED .

UNDER THE TERMS OF ARTICLE 69 ( 2 ) OF THE RULES OF PROCEDURE, THE UNSUCCESSFUL PARTY SHALL BE ORDERED TO PAY THE COSTS .

THE COURT

HEREBY :

1 . ANNULS THE DECISION OF THE COMMISSION OF THE EUROPEAN ECONOMIC COMMUNITY OF 11 MAY 1962 PUBLISHED IN THE OFFICIAL JOURNAL OF THE EUROPEAN COMMUNITIES OF 9 JUNE 1962 AT PAGES 1368-1369 AS REGARDS THOSE PARTS OF THE SAID DECISION WHICH HAVE BEEN SUBMITTED TO THE COURT;

2 . ORDERS THE DEFENDANT TO PAY THE COSTS .